IN  THE 


Supreme  Court  of  Missouri. 

imw 

OF  THE 

mmmr  of 


(JANUARY  CALL,  1910.) 

No.  15471.  ^ 


EN  BANC. 


OCTOBER  TERM,  1909. 


STATE  OF  MISSOURI,  ON  THE  RELATION  OF  EL¬ 
LIOTT  W.  MAJOR,  ATTORNEY-GENERAL,  Re¬ 
lator, 

vs. . 

THE  MO.  PAC.  R’Y  CO.,  ST.  L.,  I.  M.  &  SO.  R’Y  CO., 
ST.  L.  S.  W.  R’Y  CO.,  ST.  L.  &  SAN  FRANCISCO 
R.  R.  CO.,  THE  K.  C.  SO.  R’Y  CO.,  K.  C.,  C.  &  S. 
R’Y  CO.,  Q.,  0.  &  K.  C.  R.  R.  CO.,  M.  K.  &  T.  R’Y 
CO.,  THE  ST.  L.,  K.  C.  &  COL.  R.  R.  CO.,  C.,  B.  &  Q. 
R.  R.  CO.,  THE  C.  &  A.  R’Y  CO.,  C.,  M.  &  ST.  P. 
R’Y,  CO.,  THE  C.,  R.  I.  &  P.  R’Y.  CO.,  THE  ST.  J. 
&  G.  I.  R’Y  CO.,  WABASH  R.  R.  CO.,  THE  A.,  T.  & 
SANTA  FE  R’Y  CO.,  Respondents. 


QUO  WARRANTO. 


STATEMENT,  ABSTRACT  AND  BRIEF  FOR  RE¬ 
LATOR. 


ELLIOTT  W.  MAJOR, 
Attorney-General. 
CHARLES  G.  REVELLE, 
Assistant  Attorney-General. 
JAMES  T.  BLAIR, 

Assistant  Attorney-General. 


THE  HUGH  3TEPHENS  PRTG.  CO.,  JEFFERSON  OifT. 


IN  THE 


Supreme  Court  of  Missouri. 

EN  BANC. 


OCTOBER  TERM,  1909. 


(JANUARY  CALL,  1910.) 
No.  15471. 


STATE  OF  MISSOURI,  ON  THE  RELATION  OF  EL¬ 
LIOTT  W.  MAJOR,  ATTORNEY-GENERAL,  Re¬ 
lator, 

vs. 

THE  MO.  PAC.  R’Y  CO.,  ST.  L.,  I.  M.  &  SO.  R’Y  CO., 
ST.  L.  S.  W.  R’Y  CO.,  ST.  L.  &  SAN  FRANCISCO 
R.  R.  CO.,  THE  K.  C.  SO.  R’Y  CO.,  K.  C.,  C.  &  S. 
R’Y  CO.,  Q.,  0.  &  K.  C.  R.  R.  CO.,  M.  K.  &  T.  R’Y 
CO.,  THE  ST.  L.,  K.  C.  &  COL.  R.  R.  CO.,  C.,  B.  &  Q. 
R.  R.  CO.,  THE  C.  &  A.  R’Y  CO.,  C.,  M.  &  ST.  P. 
R’Y,  CO.,  THE  C.,  R.  I.  &  P.  R’Y.  CO.,  THE  ST.  J. 
&  G.  I.  R’Y  CO.,  WABASH  R.  R.  CO.,  THE  A.,  T.  & 
SANTA  FE  R’Y  CO.,  Respondents. 


QUO  WARRANTO. 


STATEMENT,  ABSTRACT  AND  BRIEF  FOR  RE¬ 
LATOR. 


STATEMENT. 


This  is  a  proceeding,  by  information  in  quo  warranto, 
instituted  in  this  court  against  sixteen  railway  companies. 


2 


seven  of  which  are  alleged  to  be  domestic  corporations, 
and  nine  foreign  corporations,  duly  licensed  and  admitted 
to  do  business  in  Missouri. 

The  information  contains  two  counts.  Each  count 
sets  up  that  the  sixteen  respondents,  and  one  other  road 
(which  is  in  the  hands  of  a  receiver  and  not  included  in 
this  suit)  are  competing  carriers  and  lawful  competitors 
for  business  in  this  State. 

The  first  count  charges  the  seventeen  companies  with 
having  unlawfully  confederated,  combined  and  conspired 
to  fix  and  regulate  passenger  rates  in  Missouri  and  be¬ 
tween  the  several  towns  and  cities  of  the  State  for  the 
purpose  of  destroying  competition  in  the  passenger-carry¬ 
ing  business.  The  second  count  charges  a  like  conspiracy, 
for  a  like  purpose,  with  respect  to  freight  rates  in  this 
State. 

To  this  information  respondents  filed  separate  de¬ 
murrers.  The  issues  of  law  then  raised  involve  the  suf¬ 
ficiency  of  the  information  and  the  jurisdiction  of  this 
court. 

RECORD. 

At  the  April  term,  1909,  the  Attorney-General  filed 
with  the  clerk  of  this  court  the  following  information  in 
quo  warranto: 

In  the  Supreme  Court  of  Missouri,  en  Banc. 

April  Term,  1909. 

State  of  Missouri,  on  the  relation  of  Elliott  W.  Major, 

Atomey-General,  Relator, 

vs. 

The  Missouri  Pacific  Railway  Company,  St.  Louis,  Iron 

Mountain  and  Southern  Railway  Company,  St.  Louis 

Southwestern  Railway  Company,  St.  Louis  and  San 


r 

> 


3 


Francisco  Railroad  Company,  The  Kansas  City 
Southern  Railway  Company,  Kansas  City,  Clinton 
and  Springfield  Railway  Company,  Quincy,  Omaha 
and  Kansas  City  Railroad  Company,  Missouri,  Kan¬ 
sas  and  Texas  Railway  Company,  The  St.  Louis,  Kan¬ 
sas  City  and  Colorado  Railroad  Company,  Chicago, 
Burlington  and  Quincy  Railroad  Company,  The  Chi¬ 
cago  and  Alton  Railway  Company,  Chicago,  Milwau¬ 
kee  and  St.  Paul  Railway  Company,  The  Chicago, 
Rock  Island  and  Pacific  Railway  Company,  The  St. 
Joseph  and  Grand  Island  Railway  Company,  Wabash 
Railroad  Company,  The  Atchison,  Topeka  and  Santa 
Fe  Railway  Company,  Respondents. 


INFORMATION  IN  QUO  WARRANTO. 

Now  comes  the  State  of  Missouri  by  Elliott  W.  Major, 
Attorney-General,  who,  in  this  behalf,  prosecutes  for  and 
in  the  name  of  the  State  of  Missouri,  and  informs  the 
court  that  respondents,  The  Missouri  Pacific  Railway 
Company,  St.  Louis,  Iron  Mountain  and  Southern  Rail¬ 
way  Company,  St.  Louis  Southwestern  Railway  Com¬ 
pany,  St.  Louis  and  San  Francisco  Railroad  Company, 
The  Kansas  City  Southern  Railway  Company,  Kansas 
City,  Clinton  and  Spring-field  Railway  Company,  and 
Quincy,  Omaha  and  Kansas  City  Railroad  Company  are 
corporations  duly  organized  and  existing  under  and  by 
virtue  of  the  laws  of  the  State  of  Missouri,  and  that  re¬ 
spondents,  Missouri,  Kansas  and  Texas  Railway  Com¬ 
pany,  The  St.  Louis,  Kansas  City  and  Colorado  Railroad 
Company,  Chicago,  Burlington  and  Quincy  Railroad  Com¬ 
pany,  The  Chicago  and  Alton  Railway  Company,  Chicago 
Great  Western  Railway  Company,  Chicago,  Milwaukee 
and  St.  Paul  Railway  Company,  The  Chicago,  Rock  Island 

and  Pacific  Railway  Company,  The  St.  Joseph  and  Grand 

O 

V  '1  < 

4 


I 


4 

Island  Railway  Company,  Wabash  Railroad  Company, 
The  Atchison,  Topeka  and  Santa  Fe  Railway  Company, 
are  corporations  duly  organized  and  existing  under  and 

-m 

by  virtue  of  the  laws  of  states  other  than  the  State  of 
Missouri,  and  are  authorized  and  licensed  to  do  business 
in  this  State  as  foreign  railroad  companies;  that  all  of 
the  above  named  corporations  are  railroad  companies 
duly  authorized  to,  and  are  doing  business  in  this  State, 
as  such,  and  as  common  carriers  are  engaged  in  the  trans¬ 
portation  of  passengers  in  this  State  for  hire;  that  the 
lines  of  railway  owned  and  operated  by  the  several  de¬ 
fendants,  as  aforesaid,  are  the  main  trunk  lines  and  lead¬ 
ing  railways  in  this  State,  and  so  traverse  the  State  as  to 
touch  and  penetrate  her  commercial  centers  and  other 
cities,  towns  and  communities  and  become  and  are  lawful 
competitors  for  the  passenger  trade  and  traffic  in  this 
State,  reaching  and  serving  many  cities,  towns,  points, 
centers  and  communities  in  common  as  competing  lines. 

Relator  further  informs  the  court  that  respondents 
have  formed  and  entered  into  an  unlawful  agreement, 
confederation,  combination  and  conspiracy  wherein  and 
whereby  they  have  agreed,  confederated,  combined  and 
conspired  among  themselves  and  with  each  other,  to  fix, 
regulate  and  maintain  passenger  rates  within  this  State, 
and  to  determine,  regulate  and  fix  the  rates  to  be  charged 
by  the  several  competing  lines  for  the  transportation  of 
passengers  between  the  various  cities,  towns,  points,  cen¬ 
ters  and  communities  located  in  this  State,  and  on  and 
along  the  lines  of  railway  owned  and  operated  by  respond¬ 
ents,  and  for  the  unlawful  purpose  of  limiting  and  de¬ 
stroying  competition  in  the  transportation  of  passengers 
over  their  several  lines  in  this  State,  and  for  the  unlawful 
purpose  of  depriving  the  public  and  people  of  this  State  of 
the  benefits  of  full  and  wholesome  competition,  and  for  the 


5 


unlawful  purpose  of  destroying,  limiting  and  restraining 
open  and  independent  action  on  the  part  of  each  of  the 
respondents  in  the  matter  of  passenger  rates  to  be 
charged  the  people  of  this  State. 

Relator  further  says  that  by  means  of  the  said  un¬ 
lawful  agreement,  confederation,  combination  and  con¬ 
spiracy,  the  trade,  traffic  and  commerce  in  this  State  has 
been  hindered,  injured  and  retarded,  and  that  full  and 
free  competition  in  the  transportation  of  passengers  and 
the  traveling  public  in  this  State  has  been  limited  and 
restrained,  to  the  great  damage  and  detriment  of  the 
public. 

Relator  further  states  that  by  reason  of  the  acts  and 
things  done  by  respondents,  as  hereinabove  set  out,  said 
respondents  have  been  guilty  of  a  willful,  wrongful,  ille¬ 
gal  and  malicious  perversion  and  abuse  of  the  franchises, 
licenses,  and  authority  severally  granted  to  them  by  the 
State  of  Missouri,  and  of  illegal  and  unlawful  usurpations 
of  privileges,  franchises  and  powers  not  granted  them, 
all  of  which  is  to  the  great  detriment  of  the  public  and  in 
violation  of  the  laws  and  Constitution  of  the  State  of  Mis¬ 
souri. 

Wherefore  relator  prays  that  respondent  corpora¬ 
tions,  each  and  all  of  them,  severally,  be  excluded  from 
all  corporate  rights,  privileges  and  franchises  enjoyed  or 
exercised  by  them  under  the  laws  of  the  State  of  Mis¬ 
souri,  and  that  their  rights,  authority,  licenses,  franchises 
and  certificates  to  do  business  in  the  State  of  Missouri 
be  declared  forfeited,  or  in  lieu  thereof  a  fine  be  imposed 
upon  them  in  punishment  of  the  offense,  as  above  set  out. 

For  other  and  second  count,  Elliott  W.  Major,  Attor¬ 
ney-General,  aforesaid,  who  in  this  behalf  prosecutes  for 
and  in  the  name  of  the  State  of  Missouri,  informs  the 
court  that  respondents,  The  Missouri  Pacific  Railway 


6 


Company,  St.  Louis,  Iron  Mountain  and  Southern  Rail¬ 
way  Company,  St.  Louis  Southwestern  Railway  Company, 
St.  Louis  and  San  Francisco  Railroad  Company,  The  Kan¬ 
sas  City  Southern  Railway  Company,  Kansas  City,  Clin¬ 
ton  and  Springfield  Railway  Company,  and  Quincy, 
Omaha  and  Kansas  City  Railroad  Company  are  corpora¬ 
tions  duly  organized  and  existing  under  and  by  virtue 
of  the  laws  of  the  State  of  Missouri,  and  that  respondents, 
Missouri,  Kansas  and  Texas  Railway  Company,  The  St. 
Louis,  Kansas  City  and  Colorado  Railroad  Company,  Chi¬ 
cago,  Burlington  and  Quincy  Railroad  Company,  The  Chi¬ 
cago  and  Alton  Railway  Company,  Chicago  Great  West¬ 
ern  Railway  Company,  Chicago,  Milwaukee  and  St.  Paul 
Railway  Company,  The  Chicago,  Rock  Island  and  Pacific 
Railway  Company,  The  St.  Joseph  and  Grand  Island 
Railway  Company,  Wabash  Railroad  Company,  Atchison, 
Topeka  and  Santa  Fe  Railway  Company  are  corporations 
duly  organized  and  existing  under  and  by  virtue  of  the 
laws  of  states  other  than  the  State  of  Missouri,  and  are 
authorized  and  licensed  to  do  business  in  this  State  as  for¬ 
eign  railroad  companies ;  that  all  of  the  above  named  cor¬ 
porations  are  railroad  companies  duly  authorized  to  and 
are  doing  business  in  this.  State  as  such,  and  as  common 
carriers  are  engaged  in  the  transportation  of  freight  in 
this  State  for  hire;  that  the  lines  of  railway  owned  and 
operated  by  the  several  defendants  are  the  main  trunk 
lines  and  leading  railways  in  this  State,  and  so  traverse 
the  State  as  to  touch  her  commercial  centers  and  other 
cities,  towns  and  communities,  and  become  and  are  law¬ 
ful  competitors  for  the  freight  trade  and  traffic  in  this 
State,  reaching  and  serving  many  cities,  towns,  points, 
centers  and  communities  in  common  as  competing  lines. 

Relator  further  informs  the  court  that  respondents 
have  formed  and  created,  entered  into  and  become  mem- 


7 


bers  of  and  participated  in  an  unlawful  agreement,  com¬ 
bination,  confederation,  understanding  and  conspiracy 
wherein  and  whereby  they  have  agreed,  confederated, 
combined  and  conspired  among  themselves  and  with  each 
other  to  fix,  regulate  and  maintain  freight  rates  within 
this  State,  and  to  determine,  regulate  and  fix  the  rates 
to  be  charged  by  said  several  competing  lines  for  the 
transportation  of  products,  commodities,  articles  and 
other  freight  between  the  various  cities,  towns,  points, 
centers  and  communities  located  on  and  along  their  said 
lines  in  this  State,  and  with  a  view  and  for  the  unlawful 
purpose  of  limiting,  lessening  and  destroying  full  and  free 
competition  in  the  transportation  of  products,  commodi¬ 
ties,  articles  and  other  freight  over  and  along  their  several 
lines  in  this  State,  and  with  a  view  and  for  the  unlawful 
purpose  of  depriving  the  people  of  this  State  of  the  bene¬ 
fits  of  full,  free  and  wholesome  competition  in  such  trans¬ 
portation,  and  with  a  view  and  for  the  unlawful  purpose 
of  destroying,  restricting  and  limiting  free,  open  and  in¬ 
dependent  action  on  the  part  of  each  of  the  respondents 
in  the  matter  of  freight  rates  to  be  charged  the  people 
of  this  State. 

Relator  further  states  that  said  respondents  by 
means  of  said  unlawful  agreement,  confederation,  combi¬ 
nation  and  conspiracy  have  fixed,  determined  and  regu¬ 
lated  the  rates  now  charged  and  the  rates  to  be  charged 
hereafter  for  the  transportation  of  products,  commodi¬ 
ties,  articles  and  other  freight  over  and  along  their  sev¬ 
eral  lines  in  this  State,  and  are  now  unlawfully  maintain¬ 
ing  the  rates  so  fixed  and  determined  by  the  unlawful 
means  aforesaid,  and  have  limited  and  lessened  and  are 
now  restraining  full  and  free  competition  in  the  trans¬ 
portation  of  products,  commodities,  articles  and  other 
freight,  and  are  hindering,  injuring  and  retarding  the 


8 


trade,  traffic,  and  commerce  in  this  State,  to  the  great 
damage  and  detriment  of  the  people. 

Relator  further  states  that  by  reason  of  the  acts  and 
things  done  by  respondents,  as  hereinabove  set  out,  said 
respondents  have  been  guilty  of  a  willful,  wrongful,  il¬ 
legal  and  malicious  perversion  and  abuse  of  the  fran¬ 
chises,  licenses,  and  authority  severally  granted  to  them 
by  the  State  of  Missouri,  and  of  illegal  and  unlawful 
usurpations  of  privileges,  franchises  and  powers  not 
granted  them,  all  of  which  is  to  the  great  detriment  of 
the  public  and  in  violation  of  the  laws  and  Constitution 
of  Missouri. 

Wherefore  relator  prays  that  respondent  corpora¬ 
tions,  each  and  all  of  them,  severally,  be  excluded  from 
all  corporate  rights,  privileges  and  franchises  enjoyed  or 
exercised  by  them  under  the  laws  of  the  State  of  Mis¬ 
souri,  and  that  their  rights,  authority,  licenses,  franchises 
and  certificates  to  do  business  in  the  State  of  Missouri 
be  declared  forfeited,  or  in  lieu  thereof  a  fine  be  imposed 
upon  them  in  punishment  of  the  offense,  as  above  set 
out. 

ELLIOTT  W.  MAJOR, 
Attorney-General  of  the  State  of  Missouri. 

After  due  service  the  respondents  appeared  and  filed 
the  following  demurrers : 

The  Missouri  Pacific  Railway  Company,  St.  Louis, 
Iron  Mountain  and  Southern  Railway  Company,  St. 
Louis,  Southwestern  Railway  Company,  St.  Louis  &  San 
Francisco  Railroad  Company,  The  Kansas  City  Southern 
Railway  Company,  Kansas  City,  Clinton  &  Springfield 
Railway  Company,  Quincy,  Omaha  &1  Kansas  City  Rail¬ 
road  Company,  The  St.  Louis,  Kansas  City  &  Colorado 
Railroad  Company,  Chicago,  Burlington  &  Quincy  Rail¬ 
road  Company,  The  Chicago,  Rock  Island  &  Pacific  Rail- 


( 


9 

■  i 

way  Company,  The  St.  Joseph  &  Grand  Island  Railway 
Company  and  the  Wabash  Railroad  Company  filed  the 
following1  demurrer  (omitting  caption)  to  each  count  of 
the  complaint: 

The  respondent,  the - - 

Company,  comes  and  demurs  to  the  first  count 
of  the  information  filed  herein,  for  the  follow¬ 
ing  grounds  and  objections:  (Note:  The  de¬ 
murrer  to  the  second  count  being  the  same.) 

(a) 

The  information  does  not  state  facts  suf¬ 
ficient  to  constitute  a  cause  of  action  against 
this  respondent. 

(b) 

An  agreement  between  railroad  companies, 
such  as  is  charged  in  the  information,  is  not  an 
unlawful  agreement. 

(c) 

The  information  does  not  state  facts  which 
show  that  respondent  has  committed  any  acts 
which  are  not  authorized  by  its  charter ;  or  that 
it  has  violated  the  Constitution,  the  laws  or  the 
public  policy  of  the  State  of  Missouri,  but  such 
information  affirmatively  shows  that  respond¬ 
ent  has  exercised  only  such  powers  as  it  might 
lawfully  exercise  under  the  laws  of  this  State. 

(d) 

The  information  shows  on  its  face  that  re¬ 
spondent  has  not  been  guilty  of  any  abuse,  mis- 


10 


use  or  perversion  of  its  franchises  granted  to 
it  by  the  State  of  Missouri,  or  of  any  illegal  or 
unlawful  usurpations  of  privileges,  franchises 
and  powers  granted  it. 

Wherefore,  and  for  divers  other  good 
causes  of  demurrer  appearing  in  the  informa¬ 
tion,  this  respondent  demands  the  judgment  of 
this  court  whether  it  shall  be  compelled  to  make 
any  further  or  other  answer  to  the  said  infor¬ 
mation,  and  prays  to  be  hence  dismissed  with  its 
costs  and  charges  in  this  behalf  most  wrong¬ 
fully  sustained. 

The  demurrers  filed  by  the  Chicago,  Milwaukee  & 
St.  Paul  Railway  Company  and  the  Atchison,  Topeka  & 
Santa  Fe  Railway  Company  are  substantially  the  same 
as  that  of  the  Chicago  &  Alton  Railway  Company,  which 
is  (omitting  caption),  as  follows: 

The  respondent,  the  Chicago  &  Alton  Rail¬ 
way  Company,  comes  and  demurs  to  the  first 
count  of  the  information  filed  herein,  upon  the 
following  grounds  and  objections:  (Note: 
The  demurrer  to  the  second  count  being  the 
same.) 

(a) 

The  petition  or  information  filed  herein 
by  the  Attorney-General  does  not  state  facts  suf¬ 
ficient  to  constitute  a  cause  of  action  or  entitle 
relator  to  the  relief  sought  against  this  respond¬ 
ent. 

(b) 

An  agreement  between  railroad  companies, 
such  as  is  charged  in  the  petition  or  information, 
is  not  an  unlawful  agreement. 


11 


(C) 

The  petition  or  information  does  not  state 
facts  which  show  that  respondent  has  com¬ 
mitted  any  acts  which  are  not  authorized  by  its 
charter ;  or  that  it  has  violated  the  Constitution, 
the  laws  or  the  public  policy  of  the  State  of  Mis¬ 
souri,  but  such  petition  or  information  affirma¬ 
tively  shows  that  respondent  has  exercised  only 
such  powers  as  it  might  lawfully  exercise  under 
the  laws  of  this  State. 

(d) 

The  petition  or  information  shows  on  its 
face  that  respondent  has  not  been  guilty  of  any 
abuse,  misuse  or  perversion  of  its  franchises 
granted  to  it  by  the  State  of  Missouri,  or  of  any 
illegal  or  unlawful  usurpation  of  privileges, 
franchises  and  powers  granted  to  it. 

(e) 

The  petition  or  information  shows  on  its 
face  that  the  respondent  is  a  foreign  railway 
corporation  engaged  in  interstate  commerce, 
and  as  such  is  not  subject  to  the  jurisdiction 
of  this  court  or  amenable  to  the  laws  of  this 
State  in  respect  to  the  matters  charged  in  said 
petition  or  information. 

Wherefore,  and  for  divers  other  good  causes 
of  demurrer  appearing  in  the  petition  or  infor¬ 
mation,  the  respondent  prays  the  judgment  of 
this  court  whether  it  shall  be  compelled  to  make 
any  further  or  other  plea  to  the  said  petition  or 
information ;  and  if  not  it  prays  to  be  hence  dis- 


< 


missed  with  its  costs  and  charges  in  this  be¬ 
half  most  wrongfully  sustained,  otherwise,  that 
it  be  granted  leave  to  answer  over  as  to  all  the 
charges  and  allegations  in  said  petition  or  in¬ 
formation  contained. 

The  Missouri  Kansas  &  Texas  Railway  Company 
filed  the  following  demurrer  (omitting  caption)  to  each 
count : 

Now  comes  the  respondent,  Missouri,  Kan¬ 
sas  &  Texas  Railway  Company,  and  demurs  to 
the  first  count  of  the  information  filed  in  this 
cause,  and  for  grounds  of  demurrer,  assigns  the 
following:  (Note:  The  demurrer  to  the  sec¬ 
ond  count  being  the  same.) 

(a)  The  information  does  not  state  facts 
sufficient  to  constitute  a  cause  of  action  against 
this  respondent. 

(b)  The  allegations  of  the  information  do 
not  charge  the  making  of  any  contract  that  is 
prohibited  by  or  is  in  violation  of  any  law  of 
this  state,  and  do  not  set  forth  any  terms  or 
stipulations  of  any  alleged  contract  in  order 
that  the  court  may  determine  from  such  allega¬ 
tions  whether  or  not  the  same  would  be  in  viola¬ 
tion  of  any  law  of  this  State ;  nor  do  the  said  al¬ 
legations  show  whether  or  not  the  rates  con¬ 
cerning  which  it  is  alleged  an  agreement  was 
entered  into  by  the  several  railroad  companies 
named  were  in  excess  of  rates  authorized  by  the 
laws  of  this  State  nor  whether  or  not  the  alleged 
agreement  is  of  such  character  as  that  it  could 
have  injured,  hindered  or  retarded  the  trade, 
traffic  or  commerce  of  this  State,  or  have  limit- 


IB 


ed  or  restrained  full  and  free  competition  in  the 
transportation  of  passengers  and  the  traveling 
public  in  this  State* 

(c)  The  information  does  not  state  facts 
which  show  that  respondent  has  committed  any 
acts  which  are  not  authorized  by  its  charter ;  or 
that  it  has  violated  the  constitution,  the  laws 
or  the  public  policy  of  the  State  of  Missouri,  but 
such  information  affirmatively  shows  that  re¬ 
spondent  has  exercised  only  such  powers  as  it 
might  lawfully  exercise  under  the  laws  of  this 
State. 

(d)  The  information  shows  on  its  face 
that  respondent  has  not  been  guilty  of  any 
abuse,  misuse  or  perversion  of  its  franchises 
granted  to  it  by  the  State  of  Missouri,  or  of  any 
illegal  or  unlawful  usurpation  of  privileges, 
franchises  and  powers  granted  it. 

Wherefore,  and  for  divers  other  good 
causes  of  demurrer  appearing  in  the  informa¬ 
tion,  this  respondent  prays  the  judgment  of  this 
court  whether  it  shall  be  compelled  to  make  any 
further  or  other  answer  to  the  said  information, 
and  prays  to  be  hence  dismissed  with  its  costs 
and  charges  in  this  behalf  wrongfully  sustained. 

QUESTIONS  PRESENTED. 

These  demurrers  collectively  present  in  substance 
the  following  questions : 

First :  Is  a  conspiracy,  combination  or 
agreement  entered  into  by  all  the  main  compet¬ 
ing  railway  companies  in  the  State  for  the  pur¬ 
pose  of  fixing  and  maintaining  the  rates  and 
fares  to  be  charged  by  each  of  said  companies 


14 


for  the  transportation  of  freight  or  passengers 
between  cities  and  towns  located  wholly  in  this 
State,  and  along  the  lines  of  railway  owned  by 
said  companies,  and  to  thereby  destroy  and  pre¬ 
vent  competition  between  such  companies,  viola¬ 
tive  of  the  common,  statutory  or  constitutional 
law  of  this  State? 

Second:  Are  the  allegations  of  the  com¬ 
plaint  sufficient  to  charge  such  a  conspiracy, 
combination  or  agreement? 

Third :  Are  companies  entering  into  a 
conspiracy,  combination  or  agreement  of  the 
nature  alluded  to  guilty  of  such  a  perversion 
and  abuse  of  their  franchises  and  authority  as 
to  authorize  the  State  to  invoke  the  relief  it 
seeks  by  this  action? 

Fourth:  Are  domestic  and  foreign  rail¬ 
way  companies,  while  doing  business  within 
this  State,  and  transporting  persons  or  prop¬ 
erty  between  cities  and  communities  located 
wholly  within  this  State,  and  in  fixing  and 
maintaining  rates  and  fares  applicable  solely  to 
traffic  within  this  State,  subject  to  State  juris¬ 
diction  and  amenable  to  the  State  laws  govern¬ 
ing  such  matters? 


15 


POINTS  AND  AUTHORITIES. 


I. 

Section  17,  article|2  of  the  Constitution  and  section 
1062,  R.  S.  1899,  are  violated  when  competing  railway 
companies  enter  into  an  agreement  and  combination  for 
the  purpose  of  fixing,  regulating  and  maintaining  freight 
rates  or  passenger  fares  to  be  charged  between  points 
located  in  this  State.  Such  agreements  restrain  and 
prevent  competition,  and  the  chief  purpose  sought  to  be 
accomplished  by  the  above  sections  is  to  preserve  free 
and  open  competition  between  and  among  railway  com¬ 
panies  and  prohibit  any  and  all  arrangements  which  de¬ 
feat  such  competition. 

G.  C.  &  Sa.  Fe  R.  R.  Co.  vs.  State,  72  Tex.  404. 

Northern  Security  Co.  vs.  U.  S.,  193  U.  S.  1.  c. 

351. 

Pearsall  vs.  Great  Northern  Ry.  Co.,  161  U.  S. 

1.  c.  676. 

Morrill  vs.  Railroad,  55  N.  H.  1.  c.  537. 

Currier  vs.  Railroad,  48  N.  H.  1.  c.  325. 

St.  L.,  K.  &  S.  R.  R.  vs.  Wear,  135  Mo.  230. 

II. 

Such  agreements  are  also  illegal  at  common  law  as 
being  in  restraint  of  trade  and  commerce,  against  public 
policy,  and  violative  of  the  law  of  the  corporation's  crea¬ 
tion. 


16 


State  ex  rel.  vs.  Portland  Nat’l  Gas  Co.,  153  Ind. 

1.  c.  488,  489. 

Railway  Co.  vs.  Southern  Ry.  Co.,  38  Ind.  App. 

1.  c.  244,  245,  238.  -  h 

H.  &  N.  H.  Ry.  Co.  vs.  N.  Y.  &  N.  H.  Ry.  Co.,  3 
Robertson  1.  c.  415. 

C.  C.  C.  &  I.  Ry.  Co.  vs.  Closser  et  al,  126  Ind. 

348. 

Anderson  vs.  Jett,  89  Ky.  375. 

Stanton  vs.  Allen,  5  Denio  434-49  Am.  Dec.  282. 

Hooker  et  al.  vs.  Vandewater,  4  Denio  349-47 
Am.  Dec.  258. 

Tex.  &  Pac.  Ry.  Co.  et  al  vs.  Southern  Pac.  Ry. 

Company,  41  La.  Ann.  970. 

People  vs.  Sheldon,  139  N.  Y.  251. 

E.  T.  V.  &  G.  Ry.  Co.  vs.  Interstate  Com.  Com¬ 
mission,  39  C.  C.  A.  422,  423. 

Pratt  vs.  Tapley,  3  Pugsley  N.  B.  171. 

Sanford  vs.  Ry.  Co.,  24  Pa.  St.  1.  c.  382. 

Cravens  vs.  Rogers,  101  Mo.  247. 

Clemens  vs.  Meadows,  29  Ky.  Law  Rep.  619. 

Dueber  Mfg.  Co.  vs.  Watch  &  Clock  Co.,  14  C.  C. 

A.  14,  66  Fed.  Rep.  637. 

U.  S.  vs.  Trans.  Mo.  Freight  Ass’n.,  166  U.  S. 

290. 

Joint  Traffic  Ass’n.  vs.  U.  S.,  171  U.  S.  505. 

State  vs.  Stewart,  59  Vt.  286. 

R.  R.  vs.  Collins  et  al,  40  Ga.  582. 

U.  S.  vs.  Frt.  Ass’n,  7  C.  C.  A.  15,  88. 

Peoria  &  R.  I.  Ry.  Co.  vs.  Coal  Valley  Mining 
Co.,  68  Ill.  1.  c.  494. 

/ 


17 


Northern  Security  Co.  vs.  U.  S.,  193  U.  S.  1.  c. 
351. 

Mobile  vs.  Kimbrell,  102  U.  S.  691. 

Gloucester  vs.  Pa.,  114  U.  S.  196. 

Gibbons  vs.  Ogden,  9  Wheat  1  c.  215. 

People  vs.  Raymond,  34  Calif.  1.  c.  497. 

U.  S.  vs.  Addyston  Pipe  &  Steel  Co.,  54  U.  S. 
App.,  723. 

State  ex  rel  vs.  Firemen’s  Fund  Ins.  Co.,  152 
Mo.  1.  c.  42. 

State  ex  rel.  vs.  Standard  Oil  Co.,  218  Mo.  1. 
Gibbs  vs.  Baltimore  Gas  Co.,  130  U.  S.  1.  c.  408. 

Morris  Run  Coal  Co.  vs.  Barclay  Coal  Co.,  68 
Pa.  St.  173. 

Heim  Brewing  Co.  vs.  Belinder,  97  Mo.  App.  1. 
c.  71. 

Commonwealth  vs.  Carlisle,  Brightley  (N.  P.), 
36,  38. 

Bailey  vs.  Master  Plumbers,  103  Tenn.  118. 

State  vs.  Glidden,  55  Conn.  75. 

State  ex  rel.  vs.  Stock  Exchange,  211  Mo.  1.  c. 
193. 

Beach  on  Monopolies  and  Industrial  Trusts,  par. 
149,  p.  469. 

Noyes  on  Intercorporate  Relations,  p.  372  and 
373. 

Spelling  on  Trusts  and  Monopolies,  pr.  82,  p. 
127. 

Greenhood  on  Public  Policy,  p.  2,661,  662  and 
663. 


15471-2 


18 


First  Hawkins,  P.  C.,  p.  470,  Sec.  2. 

Stewart  vs.  Erie  &  Western  Trans.  Co.  et  al., 
17  Minn.  1.  c.  895. 

Knight  &  Jilson  Co.  vs.  Miller,  87  N.  E.  1.  c. 
830-831. 

State  vs.  Board  of  Trade,  107  Minn.  505  and 
506. 

State  ex  rel.  vs.  Armour  Packing  Co.  et  al,  173 
Mo.  1.  c.  388. 

III. 

The  common  law  in  respect  to  such  unlawful  agree¬ 
ments  has  not  been  abrogated  by  statutory  provisions, 
but  the  same  is  in  full  force  and  effect  in  this  State. 

State  vs.  Norton  et  al.,  23  Zabr.  (N.  J.)  33. 

C.  W.  &  B.  Coal  Co.  vs.  People,  214  Ill.  421. 
Branden  vs.  Carter,  119  Mo.  1.  c.  581. 

Evans  vs.  McFarland,  186  Mo.  1.  c.  723. 

State  ex  rel.  vs.  Standard  Oil  Co.,  218  Mo.  1.  c. 
359,  360. 

Humphreys  vs.  Davis,  100  Ind.  1.  c.  284. 

Sec.  8970,  p.  379,  Laws  1907. 

Currier  vs.  Railroad,  48  N.  H.  329. 

IV. 

The  Anti-Trust  Act,  found  at  page  377,  Laws  1907, 
applies  to  and  covers  the  transportation  of  freight  by 
railway,  and  the  agreement  which  the  second  count  seeks 
to  condemn  violates  its  provisions. 

Sections  8965,  8968,  pp.  377,  378,  Laws  1907. 

U.  S.  vs.  Frt.  Assn,  166  U.  S.  1.  c.  324. 


19 


State  ex  rel.  vs.  Standard  Oil  Co.,  218  Mo.  1. 

State  ex  rel.  vs.  Armour  Packing  Co.,  178  Mo. 
356. 

State  ex  rel.  vs.  Firemen’s  Fund  Ins.  Co.,  152 
Mo.  1. 


V. 

The  information,  whether  measured  by  the  require¬ 
ments  of  the  common,  constitutional  or  statutory  law,  is 
amply  sufficient  to  state  an  unlawful  combination. 

Sec.  8977,  p.  381,  Laws  1907. 

C.  W.  &  V.  C.  Co.  vs.  People,  214  Ill.  421. 

State  vs.  Dreany  et  al,  69  Pac.  182. 

State  vs.  Stewart,  59  Yt.  1.  c.  286. 

State  vs.  Shaw,  42  N.  H.  393. 

U.  S.  vs.  Gardner,  42  Fed.  Rep.  829. 

Hazen  vs.  Commonwealth,  23  Pa.  St.  363. 

State  ex  rel.  vs.  Standard  Oil  Co.,  218  Mo.  1. 

State  ex  rel.  vs.  Firemen’s  Fund  Ins.  Co.,  152 
Mo.  1.  c.  40. 

Knight  &  Jilson  Co.  vs.  Miller,  87  N.  E.  1.  c.  827. 

State  ex  rel.  vs.  Mo.  Pac.  Ry.  Co.,  206  Mo.  28. 

VI. 

The  charter  of  a  private  or  public  corporation  will 
be  forfeited  for  any  willful  misuser  or  abuse  of  its  fran¬ 
chise  which  injures  or  menaces  the  interests  or  welfare 
of  the  State,  or  the  community  in  which  it  transacts  busi¬ 
ness,  whether  the  misuser  or  abuse  consists  in  the  exer¬ 
cise  of  a  franchise  or  power  not  conferred  on  the  cor- 


poration  by  its  charter,  or  in  the  violations  of  prohibi¬ 
tions  in  its  charter,  or  in  the  violations  of  the  com¬ 
mon,  statutory  or  constitutional  laws  to  which  it  is  sub¬ 
ject,  or  in  the  violation  of  established  principles  based 
upon  the  ground  of  public  policy. 

State  ex  rel.  vs.  Standard  Oil  Co.,  218  Mo.  1. 

State  ex  rel.  vs.  Delmar  Jockey  Club,  200  Mo. 
1.  c.  70. 

Eel  R.  R.  Co.  vs.  State  ex  rel.,  155  Ind.  1.  c.  456. 

Spelling  on  Extra.  Remedies,  Vol.  2  pr.  1820. 

Stockton  vs.  Central  R.  R.  Co.,  50  N.  J.  Equity, 
5  Dick,  52. 

Attorney-General  vs.  Delaware  Bound  Brook 
Ry.  Co.,  12  C.  E.,  Gr.  631-633. 

VII. 

Both  domestic  and  foreign  railway  companies,  while 
doing  business  within  this  State  and  transporting  per¬ 
sons  and  property  between  cities  and  communities  located 
wholly  within  this  State,  and  in  fixing  and  maintaining 
rates  and  fares  applicable  solely  to  traffic  within  this 
State,  are  subject  to  State  jurisdiction  and  amenable  to 
the  State  laws  governing  such  matters. 

L.  &  N.  R.  R.  vs.  Kentucky,  161  U.  S.  1.  c.  701. 

State  ex  rel.  vs.  Standard  Oil  Co.,  218  Mo.  1.  c. 
376. 

Orient  Ins.  Co.  vs.  Daggs,  172  U.  S.  1.  c.  566. 

Com.  Co.  vs.  Spencer,  205  Mo.  1.  c.  118. 

Gibbons  vs.  Ogden,  9  Wheat.  1.  c.  194-195. 

Thorp  vs.  R.  &  B.  Co.,  27  Vt.  142. 


21 


Covington,  etc.,  Bridge  Co.  vs.  Ky.,  154  U.  S. 
1.  c.  209. 

Sec.  I,  Interstate  Commerce  Act,  Appr.  Feb.  4, 
1887. 

Sec.  5,  Art.  12,  Constitution  of  Mo. 

Sec.  14,  Art.  12,  Constitution  of  Mo. 

Tenth  amendment  to  the  Constitution  of  the 
U.  S. 

Hammond  Packing  Co.  vs.  Ark.,  212  U.  S.  322. 

ARGUMENT. 

I. 

The  first  question  properly  presented  by  the  de¬ 
murrers  is  whether  an  agreement  and  combination 
entered  into  by  practically  all  the  competing  railroad 
companies  in  the  State  for  the  purpose  of  fixing,  regu¬ 
lating  and  maintaining  freight  rates  and  passenger  fares 
to  be  charged  by  such  companies,  between  points  in  this 
State,  and  thereby  to  destroy  competition,  are  in  viola¬ 
tion  of  the  constitutional,  common  or  statutory  law  of 
this  State? 

In  considering  the  question  thus  presented,  it  is  well 
to  bear  in  mind  that  railways  are  public  corporations, 
organized  for  public  purposes,  granted  valuable  fran¬ 
chises  and  privileges,  among  which  is  the  extraordinary 
right  of  eminent  domain.  These  privileges  are  granted 
by  the  Legislature,  not  as  a  favor  to  those  composing  the 
company — for  it  has  no  power  to  confer  personal  favors 
— but  for  the  benefit  of  the  public,  and  to  enable  such 
companies  to  provide  facilities  necessary  to  the  public 
convenience. 

In  this  State  such  companies  have  been  the  donees 
of  large  tracts  of  public  lands  and  of  gifts  of  money  by 


22 


municipal  corporations.  The  rendition  of  public  service 
on  the  part  of  such  companies  is  the  condition  of  such 
corporate  privileges  and  public  grants,  and,  these  having 
been  accepted,  the  obligations  involved  cannot  be  avoided.  v 

Such  companies  primarily  owe  duties  to  the  public  of  a 
nature  higher,  even,  than  their  obligations  to  the  stock¬ 
holders,  and,  as  is  said  by  the  United  States  Circuit  Court 
in  McCutcheon  vs.  Merz  Capsule  Company,  71  Fed  787 : 

“Any  conduct  which  maims  and  cripples 
their  separate  activity  by  taking  away  the  right 
to  freely  and  independently  exercise  the  func¬ 
tions  of  their  franchises  is  contrary  to  sound 
public  policy.” 

For  these  reasons  it  has  ever  been  considered  the 
very  highest  public  policy  to  keep  strict  watch  upon  such 
companies  and  to  confine  them  to  their  appointed  bounds, 
and  especially  to  guard  against  the  accumulation  of  large 
interests  under  one  control. 

As  has  been  said  in  Railroad  vs.  Collins  et  al,  40  ? 

Ga.  582  (1.  c.  630)  : 

“Without  doubt  much  of  the  prosperity  of  this  coun¬ 
try  is  due  to  the  large  number  of  corporations  which 
have  been  created,  and  especially  have  we  to  be  thank¬ 
ful  for  the  good  effected  by  railroad  companies.  But  I 
am  strongly  impressed  with  the  conviction,  that  much 
of  their  success  in  developing  the  resources  of  the  country 
is  due  to  the  very  jealousy  which  has  ever  held  them 
strictly  to  their  charters,  and  has  constantly  been  care¬ 
ful  to  prevent  an  undue  accumulation  of  interests  under 
one  management.  The  certainty  that  each  stockholder 
has,  that  his  funds  will  be  applied  to  known  and  declared 
purposes,  have  made  them  favorite  investments  for  pru¬ 
dent  men,  whilst  the  rivalry  which  opposing  interests 


23 


engender  begets  an  energy,  economy,  skill  and  enterprise 
that  have  had  much  to  do  with  the  remarkable  progress 
which  such  enterprises  have  made.  A  colossal  enter¬ 
prise,  assured  of  handsome  dividends  by  the  possession 
of  a  monopoly,  may  well  rest  upon  its  position,  knowing 
that  however  the  country  may  suffer  from  its  exactions, 
its  own  profits  are  secure.  It  is  the  rivalry  of  opposing 
interests,  the  struggle  for  success,  nay,  even  for  life, 
with  dangerous  opposition,  that  gives  life,  enterprise 
and  success  to  railroads  as  to  other  human  undertaking. 
It  has  been  the  conflict  with  thirty  State  lines,  each  with 
its  opposing  interests,  and  with  numerous  seaboard 
cities,  each  seeking  to  attract  the  rich  outpourings  from 
the  great  interior  that  has  begotten  the  mighty  net  work 
of  iron  which  interlaces  our  extensive  territory,  and  I 
am  convinced  that  there  is  no  public  policy  more  striking 
than  that  which,  whilst  it  fosters  every  such  undertaking, 
is  yet  careful  ever  to  keep  in  view  the  danger  of  a  mon¬ 
opoly,  and  the  good  effect  of  rivalry  and  conflict  between 
different  companies.” 

And  as  was  said  by  Judge  Shiras  in  his  able  dis¬ 
senting  opinion  in  U.  S.  vs.  Freight  Associations,  7  C. 

C.  A.  1.  c.  91 : 

“As  to  the  majority  of  the  community  liv¬ 
ing  along  its  line,  each  railway  company  has  a 
monopoly  of  the  business  demanding  transpor¬ 
tation  as  one  of  its  elements.  By  reason  of  this 
fact  the  action  of  the  corporation  in  establish¬ 
ing  the  rates  to  be  charged  largely  influences 
the  net  profit  coming  to  the  farmer,  the  manu¬ 
facturer  and  the  merchant  from  the  sale  of  the 
products  of  the  farm,  the  workshop  and  manu¬ 
factory,  and  of  the  merchandise  purchased  and 
resold,  and  also  largely  influences  the  price  to 


24 


be  paid  by  every  one  who  consumes  any  of  the 
property  transported  over  the  line  of  railway. 
There  is  no  other  line  of  business  carried  on  in 
our  midst  which  is  so  intimately  connected  with 
the  public  as  that  conducted  by  the  railways  of 
the  country.  *  *  *  A  railway  corporation 

engaged  in  the  transportation  of  the  persons 
and  property  of  the  community  is  always  carry¬ 
ing  on  a  public  business  which  at  all  times  di¬ 
rectly  affects  the  public  welfare.  All  contracts 
or  combinations  entered  into  between  railway 
corporations  intended  to  regulate  the  rates  to 
be  charged  the  public  for  the  service  rendered, 
must  of  necessity  affect  the  public  interests.  By 
reason  of  this  marked  distinction  existing  be¬ 
tween  enterprises  inherently  public  in  their 
character  and  those  of  a  private  nature,  and 
further  by  reason  of  the  difference  between 
private  persons  and  corporations  engaged  in 
private  pursuits,  who  owe  no  direct  or  primary 
duty  to  the  public,  and  public  corporations 
created  for  the  express  purpose  of  carrying  on 
public  enterprises,  and  which,  in  consideration 
of  the  public  powers  exercised  in  their  behalf, 
are  under  obligation  to  carry  on  the  work  in¬ 
trusted  to  their  management  primarily  in  the 
interest  and  for  the  benefit  of  the  community, 
it  seems  clear  to  me  that  the  same  test  is  not 
applicable  to  both  classes  of  business  and  cor¬ 
porations  in  determining  the  validity  of  con¬ 
tracts  and  combinations  entered  into  by  those 
engaged  therein.”  *  *  * 

“Competition,  free  and  unrestricted,  is  the 
general  rule  which  governs  all  the  ordinary 


25 


business  pursuits  and  transactions  of  life.  Evils, 
as  well  as  benefits,  result  therefrom.  In  the 
fierce  heat  of  competition  the  stronger  competi¬ 
tor  may  crush  out  the  weaker;  fluctuations  in 
prices  may  be  caused  that  result  in  wreck  and 
disaster;  yet,  balancing  the  benefits  as  against 
the  evils,  the  law  of  competition  remains  as  a 
controlling  element  in  the  business  world.  That 
free  and  unrestricted  competition  in  the  matter 
of  railroad  charges  may  be  productive  of  evils 
does  not  militate  against  the  fact  that  such  is 
the  law  now  governing  the  subject.  No  law 
can  be  enacted  nor  system  be  devised  for  the 
control  of  human  affairs  that  in  its  enforce¬ 
ment  does  not  produce  some  evil  results,  no 
matter  how  beneficial  its  general  purpose  may 
be.  There  are  benefits  and  there  are  evils 
which  result  from  the  operation  of  the  law  of 
free  competition  between  railway  companies. 
The  time  may  come  when  the  companies  will  be 
relieved  from  the  operation  of  this  law,  but 
they  cannot,  by  combination  and  agreements 
among  themselves,  bring  about  this  change.” 

In  discussing  the  power  of  railroad  companies  to 
contract  with  each  other  when  viewed  in  the  light  of 
their  duties  to  the  public,  the  Supreme  Court  of  Illinois, 
in  the  case  of  Peoria  &  Rock  Island  Ry.  Co.  vs.  The  Coal 
Valley  Mining  Co.,  68  Ill.  1.  c.  494,  said : 

“By  their  charters  they  are  empowered,  be¬ 
sides  building  and  maintaining  their  roads,  to 
carry  passengers  and  property  for  compensa¬ 
tion  ;  and  at  the  same  time  a  correlative  duty  is 


26 


imposed,  that  they  shall  receive  and  carry  pas¬ 
sengers  and  freight  over  their  roads,  as  they 
may  be  offered  for  the  purpose.  And  when  they 
accept  their  charters  it  is  with  the  implied  un¬ 
derstanding  that  they  will  fairly  perform  these 
duties  to  the  public,  as  common  carriers  of  both 
persons  and  property,  under  the  responsibility 
which  that  relation  imposes.  And  this  is  a  duty 
they  cannot  escape  by  neglect ,  refusal  or  by 
agreement  with  other  persons  or  corporations 
that  they  will  disregard  or  refuse  to  perform 
them.  These  are  duties  they  owe  the  public, 
and  it  was  in  consideration  that  they  would  be 
performed  that  their  charters  were  granted. 
They  have  no  power  to  absolve  themselves  from 
'  performing  these  charter  obligations,  and  any 
effort  to  do  so  by  contract,  or  otherwise,  is  void. 
Whilst  railroads  must  be  protected  in  ail  of  their 
rights  with  the  same  exactness  that  individuals 
are,  they  must  at  the  same  time  be  held  to  a 
rigid  performance  of  their  duties  to  the  public.” 

In  the  opinion  the  court  gives  its  assent  to  the  propo¬ 
sition  that  railway  companies  cannot  use  the  courts  to 
enforce  an  agreement  which  “would  destroy  all  competi¬ 
tion  and  leave  the  public  at  the  mercy  of”  the  companies 
(p.  498). 

If  the  respondents  complain  that  the  rule  of  compe¬ 
tition  is  harsh  or  warfare  over  rates  is  fraught  with  evil 
to  their  shareholders,  it  should  be  sufficient  to  reply  that 
the  welfare  of  the  public,  which  is  promoted  by  such 
competition,  is  paramount  to  the  interests  of  the  selected 
few  who  compose  the  companies,  and  that  at  the  time  they 
accepted  their  franchises  and  their  corresponding  and  con¬ 
sequent  advantages,  competition  was  the  prime  factor  and 


27 


governing  law  in  the  business  world,  and  the  obligations 
assumed  by  them,  and  the  law  under  which  they  operate, 
require  that  they  engage  in  it  during  the  life  of  their 
grant,  and  that  it  is  asking  entirely  too  much  to  demand 
that  the  public  be  made  to  suffer  because  through  their 
own  actions  in  reducing  rates,  giving  better  service, 
being  more  active  and  endeavoring  to  get  the  bulk  of 
business,  they  may,  perchance,  cause  evil  to  themselves. 

With  respect  to  the  argument,  usually  put  forward 
in  cases  of  this  character,  to  the  effect  that  the  conse¬ 
quences  of  the  enforcement  of  anti-trust  laws  would 
be  injurious  to  business,  etc.,  the  Supreme  Court  of  the 
United  States  in  Northern  Securities  Co.  vs.  United 
States,  193  U.  S.  1.  c.  351,  gave  expression  to  its  views 
as  follows : 

“Many  suggestions  were  made  in  argu¬ 
ment  based  upon  the  thought  that  the  Anti- 
Trust  Act  would  in  the  end  prove  to  be  mis¬ 
chievous  in  its  consequences.  Disaster  to  busi¬ 
ness  and  wide-spread  financial  ruin,  it  has  been 
intimated,  will  follow  the  execution  of  its  pro¬ 
visions.  Such  predictions  were  made  in  all  the 
cases  heretofore  arising  under  that  act.  But 
they  have  not  been  verified.  It  is  the  history 
of  monopolies  in  this  country  and  in  England, 
that  predictions  of  ruin  are  habitually  made  by 
them  when  it  is  attempted,  by  legislation,  to 
restrain  their  operations  and  to  protect  the 
public  against  their  exactions.  In  this,  as  in 
former  cases,  they  seek  shelter  behind  the  re¬ 
served  rights  of  the  states  and  even  behind  the 
constitutional  guarantee  of  liberty  of  contract. 
But  this  court  has  heretofore  adjudged  that  the 
act  of  Congress  did  not  touch  the  rights  of  the 


28 


states,  and  that  liberty  of  contract  did  not  in¬ 
volve  a  right  to  deprive  the  public  of  the  ad¬ 
vantages  of  free  competition  in  trade  and  com¬ 
merce.  Liberty  of  contract  does  not  imply 
liberty  in  a  corporation  or  individuals  to  defy 
the  national  will,  when  legally  expressed.  Nor 
does  the  enforcement  of  a  legal  enactment  of 
Congress  infringe,  in  any  proper  sense,  the  gen¬ 
eral  inherent  right  of  every  one  to  acquire  and 
hold  property.  That  right,  like  all  other  rights, 
must  be  exercised  in  subordination  to  the  law. 

But  even  if  the  court  shared  the  gloomy 
forebodings  in  wdiich  the  defendants  indulge, 
it  could  not  refuse  to  respect  the  action  of  the 
legislative  branch  of  the  Government  if  what 
it  has  done  is  within  the  limits  of  its  consti¬ 
tutional  power.  The  suggestions  of  disaster 
to  business  have,  we  apprehend,  their  origin  in 
the  zeal  of  parties  who  are  opposed  to  the 
policy  underlying  the  act  of  Congress  or  are 
interested  in  the  result  of  this  particular  case ; 
at  any  rate,  the  suggestions  imply  that  the 
court  may  and  ought  to  refuse  the  enforcement 
of  the  provisions  of  the  act  if,  in  its  judgment, 
Congress  was  not  wise  in  prescribing  as  a  rule 
by  which  the  conduct  of  interstate  and  inter¬ 
national  commerce  is  to  be  governed,  that  every 
combination,  whatever  its  form,  in  restraint 
of  such  commerce  and  the  monopolizing  or  at¬ 
tempting  to  monopolize  such  commerce,  shall  be 
illegal.  These,  plainly,  are  questions  as  to  the 
policy  of  legislation  Swhich  belong  to  another 
department,  and  this  court  has  no  function  to 
supervise  such  legislation  from  the  standpoint 
of  wisdom  or  policy.,, 


29 


II. 

THIS  COMBINATION  VIOLATES  SEC.  17,  ART. 
12,  OF  THE  CONSTITUTION,  AND  SEC.  1062,  R.  S. 
1899. 

Combinations  for  increasing  and  maintaining  prices 
made  their  appearance  under  ancient  forms  of  civiliza¬ 
tion,  and  the  motives  inducing  their  formation  and  ends 
sought  then,  as  now,  were  to  advance  selfish,  pecuniary 
interests  by  taking  advantage  of  the  necessities  of  others. 
Recognizing  this  tendency  on  the  part  of  large  interests, 
appreciating  the  wholesome  effects  of  rivalry  and  compe¬ 
tition  between  such  forces  as  railroad  companies,  and 
endeavoring  to  avoid  the  dangers  which  experience  had 
demonstrated  follow  the  combination  of  such  powerful 
corporations,  the  organic  law  of  this  State  provided : 

“No  railroad  or  other  corporation,  or  the 
lessees,  purchasers  or  managers  of  any  rail¬ 
road  corporation,  shall  consolidate  the  stock, 
property  or  franchise  of  such  corporation  with, 
or  lease  or  purchase  the  works  or  franchises  of, 
or  in  any  way  control,  any  railroad  corpora¬ 
tion  owning  or  having  under  its  control  a 
parallel  or  competing  line;  nor  shall  any  officer 
of  such  railroad  corporation  act  as  an  officer, 
of  any  other  railroad  corporation  owning  or 
having  the  control  of  a  parallel  or  competing 
line.  The  question  whether  railroads  are 
parallel  or  competing  lines  shall,  when  demand¬ 
ed,  be  decided  by  a  jury,  as  in  other  civil  issues.” 
Sec.  17,  Art.  Xl^Const.  of  Mo. 

The  Constitution  of  Texas  contained  the  following 
provision : 


30 


“No  railroad,  or  managers  of  any  railroad 
corporation,  shall  consolidate  the  stock,  prop¬ 
erty  or  franchise  of  such  corporation  with,  or 
in  any  way  control  any  railroad  corporation 
owning,  or  having  under  its  control  a  parallel 
or  competing  line.” 

In  Gulf,  Colorado  and  Santa  Fe  Railroad  Company 
vs.  State,  72  Texas,  404,  it  developed  that  one  of  the  pur¬ 
poses  of  the  Texas  Traffic  Association  was  to  prevent 
“sudden  and  extreme  fluctuations  in  Texas  rates.”  The 
Association  was  managed  by  an  executive  committee 
composed  of  the  representatives  from  each  of  its  mem¬ 
bers.  This  committee  was  charged  with  the  power  to 
and  did  classify  and  fix  uniform  freight  rates  to  be 
charged  by  the  members  of  the  Association. 

In  an  action  instituted  by  the  State  against  the  sev¬ 
eral  railroad  companies  composing  the  Association,  the 
court  said: 

“We  think  it  apparent  that  a  leading  object, 
if  not  the  sole  object  of  the  association,  is  by  the 
appointment  of  a  common  governing  committee 
to  fix  rates  of  transportation  so  as  to  prevent 
competition  among  the  several  parties  to  the 
contract.  We  think  it  also  apparent  from  the 
language  of  the  section  of  the  State  Constitu¬ 
tion  that  its  leading  object  was  to  prevent  com - 
petiting  lines  of  railroad  in  the  State  from  so 
fettering  themselves  by  consolidation,  lease  or 
other  agreement  by  which  one  should  in  any 
way  subject  itself  to  the  control  of  another  so 
as  to  stifle  competition  for  the  traffic  of  the 
State.  The  section  prohibits  any  railroad  com¬ 
pany,  or  the  managers  of  any  such  company, 


31 


from  controlling  in  any  way  another  company 
owning  a  competing  line.  If  one  is  prohibited 
from  making  such  contract,  we  think  two  or 
more  are  so  prohibited,  and  that  when  one  com¬ 
pany  enters  into  an  agreement  with  others  any 
one  of  which  owns  or  controls  a  competing  line 
of  railroad  by  which  it  subjects  itself  to  the 
government  of  a  body  appointed  by  all  parties 
to  the  agreement,  that  such  company  places  it¬ 
self  under  the  control  of  the  other  to  a  definite 
extent  and  acts  in  violation  of  the  Constitution 
of  the  State.  The  manner  and  extent  of  the 
control  are  immaterial.  The  language  of  the 
Constitution  clearly  evinces  that  control  in  any 
manner  and  to  any  extent  was  intended  to  be 
prohibited,  provided  that  it  was  such  as  is  cal¬ 
culated  to  enable  the  one  railroad  by  means  of  a 
contract  or  agreement  for  an  interference  in 
the  other's  affairs  to  keep  down  competition  be¬ 
tween  them.” 

It  is  to  be  noted  that  the  language  used  in  the  con¬ 
stitutional  provision  on  which  this  agreement  was  de¬ 
clared  illegal,  while  strikingly  similar  to,  is  not  as  sweep¬ 
ing  as  that  contained  in  our  own  Constitution. 

For  the  purpose  of  enabling  the  Legislature  to  make 
adequate  provision  for  the  control  of  combinations  among 
railroad  companies,  and  to  properly  meet  such  methods 
as  might  be  devised  by  them  for  the  accomplishment  of 
such  forbidden  purposes,  the  Constitution  further  pro¬ 
vided  : 

“The  exercise  of  the  police  power  of  the 
State  shall  never  be  abridged,  or  so  construed 
as  to  permit  corporations  to  conduct  their  busi- 


32 


ness  in  such  manner  as  to  infringe  the  eqwal 
rights  of  individuals ,  or  the  general  well-being 
of  the  State”  Sec.  5,  Art.  12. 

And  that 

“Railways  heretofore  constructed,  or  that 
may  hereafter  be  constructed  in  this  State,  are 
hereby  declared  public  highways,  and  railroad 
companies  common  carriers.  The  General  As¬ 
sembly  shall  pass  laws  to  correct  abuses  and 
prevent  unjust  discrimination  and  extortion  in 
the  rates  of  freight  and  passenger  tariffs  on 
the  different  railroads  in  this  State,  and  shall 
from  time  to  time  pass  laws  establishing  rea¬ 
sonable  maximum  rates  of  charges  for  the 
transportation  of  passengers  and  freight  on  said 
railroads,  and  enforce  all  such  laws  by  adequate 
penalties.”  Sec.  14,  Art.  12. 

These  sections  are  a  clear  reservation  of  power  over 
railroad  corporations,  and  are  designed  to  secure  due 
subordination  of  the  companies  to  the  rights  of  individ¬ 
uals  and  the  general  welfare.  The  Legislature  is  not 
only  authorized  but  directed  to  enact  laws  for  the  sup¬ 
pression  and  prevention  of  all  new  forms  of  combinations 
and  to  enforce  the  same  by  adequate  penalties. 

In  furtherance  of  this  purpose  of  the  organic  law  to 
prohibit  anything  which  destroyed  or  lessened  competi¬ 
tion  between  railroad  companies,  the  Legislature  in  1887 
(Laws  1887,  p.  102),  enacted  the  following  section  :  (Sec¬ 
tion  1062,  R.  S.  1899)  : 

“It  shall  be  unlawful  for  any  railroad  com¬ 
pany,  corporation  or  individual  owning,  operat¬ 
ing  or  managing  any  railroad  in  the  State  of 


33 


Missouri,  to  enter  into  any  contract ,  combina¬ 
tion  or  association,  or  by  any  manner  of  means 
whatever  consolidate  the  stock,  property  or 
franchise  of  such  company,  corporation  or  in¬ 
dividual,  or  to  lease  or  purchase  the  works  or 
franchises  of,  or  in  any  way  whatever  to  any 
degree  exercise  control  over,  any  railroad  com¬ 
pany,  corporation  or  individual  owning  or  hav¬ 
ing  under  his  or  their  control  or  management  a 
parallel  or  competing  line  in  this  State,  but  each 
and  every  such  railroad,  whether  owned,  oper¬ 
ated  or  managed  by  a  company,  corporation  or 
individual,  shall  be  run,  operated  and  managed 
separately  by  its  own  officers  and  agents,  and  be 
dependent  for  its  support  on  its  own  earnings 
from  its  local  and  through  business  in  connec¬ 
tion  with  other  roads,  and  the  facilities  and  ac¬ 
commodations  it  shall  afford  the  public  for 
travel  and  transportation  under  fair  and  open 
competition ” 

This  section  provides  in  explicit  terms  against  every 
form  of  agreement,  or  others  means,  by  which  any  degree 
of  control  is  exercised  by  one  road  over  another, 
and  plainly  requires  separate  and  independent  action  on 
the  part  of  each  road  in  all  matters  pertaining  to  its  busi¬ 
ness,  including  that  of  fixing  both  freight  and  passenger 
rates,  and  lays  its  prohibition  against  everything  which 
tends  to  destroy  or  lessen  open  competition. 

If  respondents  have  entered  into  a  combination  or 
agreement,  as  alleged  in  both  counts  of  the  complaint,  how 
can  it  be  contended  that  this  statutory  inhibition  is  not 
violated.  The  business  of  railway  companies  consists  of 
the  transportation  of  person  and  commodities,  and  such 


15471—3 


34 


companies  are  dependent  for  their  earnings  on  the  rates 
charged  for  such  transportation.  Upon  their  rates  di¬ 
rectly  depend  the  business,  prosperity  and  even  life  of 
such  companies,  and  it  must  therefore  follow  that  if  an¬ 
other  company  has  a  voice  in  determining  a  matter  so 
vital  and  material,  such  company  is  exercising  over  the 
other  the  highest  and  most  important  <(degree  of  con¬ 
trol,”  and  the  road  thus  controlled  is  not  “operated  and 
managed  separately  by  its  own  officers  and  agents”  but 
jointly  by  the  officers  or  agents  of  its  competitors.  It  is 
also  apparent  that  under  such  an  arrangement  each  road 
is  not  “dependent  for  its  support  on  its  own  earnings 
from  its  business  and  the  facilities  and  accommodations 
afforded  the  public  for  travel  and  transportation  under 
fair  and  open  competition”  The  “accommodations”  in 
so  far  as  rates  are  concerned  are  the  same  on  all  these 
roads,  and  instead  of  being  determined  under  fair  and 
open  competition,  are  fixed  by  collusion,  combination  and 
conspiracy .  This  character  of  a  combination  is  as  effect¬ 
ual  to  accomplish  the  purposes  forbidden  by  the  law  and 
to  bring  about  the  public  menace  against  which  protec¬ 
tion  has  been  designed  as  would  a  direct  and  open  consoli¬ 
dation  of  all  these  powerful  interests  in  one  corporation, 
officered,  managed  and  controlled  by  one  set  of  directors. 
The  chief  reason  for  the  constitutional  and  statutory  pro¬ 
hibition  against  a  consolidation  and  common  manage¬ 
ment  of  such  corporations  is  to  preserve  competition, 
and  its  resultant  benefits,  and  if  this  purpose  can  be  de¬ 
feated  by  subterfuges  or  flimsy  or  even  clever  devices, 
the  law  was  written  to  no  purpose. 

In  such  cases  courts  will  look  to  the  substance  and 
not  merely  the  outward  form,  and  if  it  appears  that  the 
arrangement  accomplishes  that  which  the  law  prohibits, 
its  condemnation  must  follow,  regardless  of  the  form  or 


I 


35 

structure  of  the  arrangement,  its  indirect  operation  or 
the  manner  in  which  the  company  became  a  party.  If 
such  a  combination  as  that  formed  by  these  respondents 
be  not  destroyed,  the  objects  of  the  constitutional  and 
statutory  provisions  above  set  out  are  defeated,  and  the 
advantages  that  would  naturally  come  to  the  public  under 
their  enforcement  and  the  operation  of  the  general  laws 
of  competition  will  be  lost  and  the  public  left  at  the  mercy 
of  one  powerful  and  mercenary  concern. 

That  the  real  purposes  of  constitutional  provisions 
prohibiting  consolidations  of  railways  is  to  preserve  com¬ 
petition  among  the  roads  is  manifest  from  the  decisions 
dealing  with  attempted  consolidations. 

In  the  case  of  Pearsall  vs.  Great  Northern  R.  Co., 
161  U.  S.  1.  c.  676,  it  was  said  by  the  Supreme  Court  of 
the  United  States: 

“Whether  the  consolidation  of  competing 
lines  will  necessarily  result  in  an  increase  of 
rates,  or  whether  such  consolidation  has 
generally  resulted  in  a  detriment  to  the 
public,  is  beside  the  question.  Whether  it 
has  that  effect  or  not,  it  certainly  puts 
it  in  the  power  of  the  consolidated  cor¬ 
poration  to  give  it  that  effect — in  short,  puts 
the  public  at  the  mercy  of  the  corporation.  There 
is  and  has  been,  for  the  past  three  hundred 
years,  both  in  England  and  in  this  country,  a 
popular  prejudice  against  monopolies  in  general, 
which  has  found  expression  in  innumerable  acts 
of  legislation.  We  cannot  say  that  such  pre¬ 
judice  is  not  well  founded.  It  is  a  matter  upon 
which  the  legislature  is  entitled  to  pass  judg¬ 
ment.  At  least  there  is  sufficient  doubt  of  the 
propriety  of  such  monopolies  to  authorize  the 


36 


legislature,  which  may  be  presumed  to  represent 
the  views  of  the  public,  to  say  that  it  will  not 
tolerate  them  unless  the  power  to  establish  them 
be  conferred  by  clear  and  explicit  language. 
While,  in  particular  cases,  two  railways  by  con¬ 
solidating  their  interests  under  a  single  manage¬ 
ment,  may  have  been  able  to  so  far  reduce  the  ex¬ 
penses  of  administration  as  to  give  their  cus¬ 
tomers  the  benefit  of  a  lower  tariff,  the  logical 
effect  of  all  monopolies  is  an  increase  of  price  of 
the  thing  produced,  whether  it  be  merchandise 
or  transportation.  Owing  to  the  greater  speed 
and  cheapness  of  the  service  performed  by  them, 
railways  become  necessarily  monopolists  of  all 
traffic  along  their  lines;  but  the  general  senti¬ 
ment  of  the  public  declares  that  such  monopolies 
must  be  limited  to  the  necessities  of  the  case,  and 
rebels  against  the  attempt  of  one  road  to  con¬ 
trol  all  traffic  between  terminal  points,  also  con¬ 
nected  by  a  competing  line.  There  are,  more¬ 
over,  thought  to  be  other  dangers  to  the  moral 
sense  of  the  community  incident  to  such  great 
aggregations  of  wealth,  which,  though  indirect, 
are  even  more  insidious  in  their  influence,  and 
such  as  have  awakened  feelings  of  hostility 
which  have  not  failed  to  find  expression  in  legis¬ 
lative  acts. 

The  consolidation  of  these  two  great  cor¬ 
porations  will  unavoidably  result  in  giving  to 
the  defendant  a  monopoly  of  all  traffic  in  the 
northern  half  of  the  State  of  Minnesota,  as 
well  as  of  all  transcontinental  traffic  north  of 
the  line  of  the  Union  Pacific,  against  which  pub¬ 
lic  regulations  will  be  but  a  feeble  protection. 


37 


The  acts  of  the  Minnesota  legislature  of  1874 
and  1881  undoubtedly  reflected  the  general  sen¬ 
timent  of  the  public,  that  their  best  security  is 
in  competition.” 

Under  a  New  Hampshire  statute  (Morrill  vs.  Rail¬ 
road,  55  N.  H.  1.  c.  537),  a  bill  was  filed  to  cancel  a  con¬ 
tract  between  a  railroad  organized  under  the  laws  of 
Massachusetts,  but  operating  roads  chartered  in  New 
Hampshire,  and  a  railroad  organized  and  operating  in 
New  Hampshire,  whereby  a  division  of  forty  per  cent,  of 
gross  receipts  was  provided  for. 

In  this  case,  55  N.  H.  1.  c.  539,  Judge  Cushing  said : 

“The  injurious  effect  of  a  consolidation  is 
the  prevention  of  competition,  and  that  whole¬ 
some  restraint  upon  exorbitant  fares  which  can 
only  be  secured  by  free  competition.  A  con¬ 
tract  which  provides  for  dividing  the  earnings, 
after  deducting  a  certain  percentage  for  ex¬ 
penses,  and  which,  therefore,  makes  it  indiffer¬ 
ent  to  the  parties  to  the  contract  in  which  of  the 
lines  the  passengers  or  freight  are  carried,  con¬ 
tains  in  itself  the  most  essential  element  of  con¬ 
solidation,  and  is,  therefore,  in  violation  of  the 
law.” 

In  Currier  vs.  Railroad,  48  N.  H.  1.  c.  325,  the  Su¬ 
preme  Court  of  New  Hampshire,  with  reference  to  an 
act  of  the  Legislature  of  that  State,  prohibiting  consoli¬ 
dation  of  railways  and  the  running  or  operating  of  one 
rival  road  by  another,  said : 

“The  object  of  the  law  is  to  prevent  the 
consolidation  of  rival  competing  lines  of  rail¬ 
road  by  contracts  or  arrangements  between 


38 


them,  by  means  of  which  competition  is  re¬ 
moved;  the  purpose  being  to  prevent  the  in¬ 
crease  of  the  charges  of  such  railroads  beyond 
what  might  be  expected  under  the  influence  of 
a  free  competition.  In  the  promotion  of  this 
object  every  citizen  having  occasion  to  use  such 
roads,  or  to  purchase  articles  transported  over 
them,  has  an  interest;  but  his  interest  is  not  of 
the  character  that  may  be  protected  by  a  suit  to 
recover  damages.  It  is  much  like  the  interest 
which  every  citizen  has  in  a  common  highway — 
in  its  being  kept  in  repair — and  there,  inde¬ 
pendent  of  statute  provisions,  he  can  maintain 
no  action  on  account  of  any  defect  in  its  con¬ 
dition;  and  by  statute  he  can  maintain  an  ac¬ 
tion  only  in  case  he  suffer  special  damages  while 
in  the  use  of  the  road,  but  not  for  being  de¬ 
prived  of  the  use  of  it  altogether  by  its  being 
permitted  to  become  impassable;  as  held  in 
Griffin  vs.  Sanbornton,  44  N.  H.  246.  Upon 
the  same  principle  no  person  has  such  an  inter¬ 
est  in  preserving  a  free  competition  between 
rival  railroads  as  to  be  entitled  to  maintain  a 
suit  for  diminishing  or  removing  such  compe¬ 
tition;  but  the  wrong  which  arises  from  the 
violation  of  the  provisions  of  the  statute  is 
essentially  a  public  wrong  in  which  no  citizen 
has  a  special  or  private  interest.” 

In  construing  the  constitutional  and  statutory  pro¬ 
visions  heretofore  referred  to,  this  court  in  St.  Louis,  K. 
&  S.  R.  R.  Co.,  vs.  Wear,  135  Mo.  230,  decided  that  the 
president  of  a  railroad  company  is  not  eligible  to  ap¬ 
pointment  as  receiver  of  a  parallel  and  competing  line. 


39 


III. 

In  pooling  contracts,  which  are  undoubtedly  pro¬ 
hibited  by  every  consideration  of  public  policy,  as  well 
as  by  the  Constitution  and  Statute,  there  is  but  one  ele¬ 
ment  which  infringes  the  rights  of  the  public,  and  that 
is  the  one  which  eliminates  competition.  Out  of  it  grows 
the  condemnation  visited  by  the  courts  upon  such  agree¬ 
ments.  The  mere  division  of  profits  between  two  or 
among  several  carriers  could  not  effect  the  public,  how¬ 
ever  injurious  it  might  be  to  the  stockholders  of  some 
of  the  companies,  if  the  sums  divided  accrued  from 
charges  lawfully  made  for  services  properly  rendered.  It 
is  the  fact  that  pooling  agreements  eliminate  compe¬ 
tition  which  renders  them  obnoxious  to  public  policy, 
subjects  them  to  the  condemnation  of  the  law,  which  has 
invoked  legislative  action  and  has  led  to  constitutional 
prohibitions  against  them. 

The  provisions  in  pooling  agreements  respecting  the 
division  of  profits  are  included  for  the  purpose  and  alone 
for  the  purpose  of  enforcing  the  provisions  eliminat¬ 
ing  competition. 

The  ingenuity  of  the  framers  of  these  agreements  is 
exerted  toward  hedging  about  the  parties  thereto  in  such 
manner  as  to  effectuate  the  purpose  to  destroy  competi¬ 
tion,  and  an  examination  of  the  agreements  of  this  char¬ 
acter  which  have  found  their  way  into  the  reports,  dis¬ 
close  that  the  complex  provisions  which  they  usually  con¬ 
tain  are  but  the  means  which  the  parties  deem  most  ef¬ 
fectual  to  remove  every  temptation  to  engage  in  com¬ 
petition  with  each  other. 

The  division  of  profits  is  not  a  necessary  element  of 
“pooling  agreements.”  That  this  is  true  is  clear  from  the 
purpose  to  be  accomplished  by  prohibitions  against  pool¬ 
ing  agreements. 


40 


In  Tift  vs.  Southern  Ry.  Co.,  138  Fed.  Rep.  1.  c. 
761,  Judge  Speer,  in  upholding  a  finding  of  the  Interstate 
Commerce  Commission  that  the  “Southern  Freight  As¬ 
sociation,”  which  included  a  number  of  southern  rail¬ 
roads,  in  agreeing  to  advance  rates,  had  acted  unreason¬ 
ably,  unjustly  and  in  violation  of  the  act  regulating  com¬ 
merce,  said: 

“The  commission  concludes  that  it  is  its 
duty  to  consider  this  joint,  or  concert  of,  action 
of  the  defendants  as  bearing  upon  the  reason¬ 
ableness  and  validity  of  the  advanced  rate  which 
results.  It  holds  that  the  element  of  competi¬ 
tion  is  eliminated.  In  the  absence  of  legitimate 
competition,  destroyed,  as  we  shall  presently 
see,  by  methods  obviously  illegal,  the  commis¬ 
sion  presumes  that  the  advanced  rates  are  higher 
than  legitimate  competition  would  produce.  In 
other  words,  the  marked  increase  for  charges  for 
transportation  of  that  commodity  which,  save 
one  other,  affords  the  largest  tonnage  of  freight 
to  the  respondent  roads,  did  not  originate  from 
a  normal  or  reasonable  exigency  of  the  respond¬ 
ents’  business.  On  the  contrary,  it  was  an 
arbitrary  exaction  imposed  by  a  combination  of 
railroad  agents  made  in  restraint  of  the  natural 
movement  of  the  product  in  the  lumber  trade. 
This  combination  or  concert  of  action  on  the 
part  of  the  respondent  railroads  is  plainly  vio¬ 
lative  of  that  provision  of  the  interstate  com¬ 
merce  law  which  forbids  pooling.  This  was 
enacted  among  other  things,  for  the  purpose  of 
securing  competition.  Pooling  may  be  as  well 
effected  by  a  concert  in  fixing  in  advance  the 
!  rates  which  in  the  aggregate  would  accumulate 


L 


41 


the  earnings  of  naturally  competing  lines,  as 
by  depositing  all  of  such  earnings  to  a  common 
account  and  distributing  them  afterwards.  That 
such  an  association  and  concert  of  action  be¬ 
tween  agents  of  naturally  competing  lines  is 
destructive  of  competition  is  equally  unanswer¬ 
able.  To  entertain  any  other  view  is  to  ignore 
reiterated  decisions  of  the  Supreme  Court  of  the 
United  States,  and  many  rulings  of  the  circuit 
courts  and  of  the  state  courts.” 

The  opinion  from  which  the  above  quotation  is  taken 
was  approved  by  the  Circuit  Court  of  Appeals  in  Tift 
vs.  So.  Ry.,  79  C.  C.  A.  1.  c.  536. 

It  is  fair  to  say  that  the  fact  that  several  decisions 
rendered  by  Judge  Speer,  to  which  he  modestly  adverts, 
laid  down  principles  respecting  unlawful  combinations 
which  afterwards  found  approval  in  decisions  of  the  Su¬ 
preme  Court  of  the  United  States,  entitles  his  opinion  in 
the  case  cited  to  more  than  ordinary  respect. 

Section  1135,  R.  S.  1899,  constitutes  a  legislative 
recognition  of  the  fact  that  pooling  agreements  need  not 
necessarily  include  a  provision  for  a  division  of  profits. 
Pooling  agreements  and  agreements  for  the  division  of 
profits  are  prohibited  by  distinct  clauses  of  this  section: 

“It  shall  be  unawful  for  any  common  car¬ 
rier  subject  to  the  provisions  of  this  article  to 
enter  into  any  contract,  agreement  or  combi¬ 
nation  with  any  other  common  carrier  or  car¬ 
riers  for  the  pooling  of  freights  of  different  and 
competing  railroads,  or  to  divide  between  them 
the  aggregate  net  proceeds  of  the  earnings  of 
such  railroads,  or  any  portion  thereof;  and  in 
case  of  an  agreement  for  the  pooling  of  freights 


as  aforesaid,  each  day  of  its  continuance  shall 
be  deemed  a  separate  offense.” 

IV. 

THIS  COMBINATION  IS  ALSO  ILLEGAL  AT  COM¬ 
MON  LAW.  IT  OPERATES  TO  RESTRAIN 
TRADE  AND  COMMERCE,  IS  AGAINST  PUBLIC 
POLICY  AND  VIOLATES  FRANCHISE  OBLIGA¬ 
TIONS. 

In  seeking  to  condemn  this  agreement  and  to  guar¬ 
antee  the  public  the  benefits  of  competition  between  rail¬ 
road  companies,  we  are  not  invoking  new  principles  or 
making  new  applications.  Whether  regarded  with  ref¬ 
erence  to  principles  adopted  by  text-books  or  to  specific 
judicial  decisions  from  early  times  to  the  present,  such 
agreements,  aside  from  constitutional  and  statutory  pro¬ 
visions,  are  against  public  policy,  in  restraint  of  trade 
and  commerce,  violative  of  franchise  obligations  and  il¬ 
legal  at  common  law. 

It  is  alleged  that  the  purpose  and  effect  of  the  com¬ 
bination  is  to  fix  and  maintain  both  freight  and  passen¬ 
ger  rates  and  to  prevent  and  lessen  competition  in  the 
transportation  of  freight  and  persons.  The  transporta¬ 
tion  of  freight  and  persons  is  commerce. 

Mr.  Justice  Field,  in  County  of  Mobile  vs.  Kimbrell, 
102  U.  S.  691,  said: 

“Commerce  with  foreign  countries  and 
among  states  consists  in  intercourse  and  traffic 
including  in  these  terms  navigation  and  the 
transportation  and  transit  of  persons  and  prop¬ 
erty.” 

And  this  definition  has  been  adopted  by  the  court  in 
Hopkins  vs.  United  States,  171  U.  S.  578. 


43 


United  States  vs.  Freight  Association,  166  U. 
S.  290. 

United  States  vs.  Joint  Traffic  Association,  171 
U.  S.  505. 

Gloucester  vs.  Pennsylvania,  114  U.  S.  196. 

United  States  vs.  Addyston  Pipe  &  Steel  Co., 
54  U.  S.  App.  1.  c.  766. 

In  Gibbons  vs.  Ogden,  9  Wheat,  1.  c.  215,  the  Su¬ 
preme  Court  of  the  United  States  held  that  the  term 
“commerce”  included  the  transportation  of  passengers, 
as  well  as  the  transportation  of  freight. 

In  this  case  the  validity  of  an  exclusive  grant  by  the 
State  of  New  York  to  Livingston  &  Fulton  to  navigate 
the  waters  of  the  State  named,  with  vessels  propelled  by 
steam,  was  in  question.  The  particular  vessel  over  which 
the  controversy  arose  was  used  for  transportation  of 
passengers.  The  argument  was  made  that  the  power  to 
regulate  “commerce”  did  not  include  a  power  to  regulate 
the  transportation  of  persons.  The  court,  however,  said : 

“The  boats  of  the  appellant  were,  we  are 
told,  employed  in  the  transportation  of  passen¬ 
gers  ;  and  this  is  no  part  of  that  commerce  which 
Congress  may  regulate. 

If,  as  our  whole  course  of  legislation  on 
this  subject  shows,  the  power  of  Congress  has 
been  universally  understood  in  America,  to  com¬ 
prehend  navigation,  it  is  a  very  persuasive,  if 
not  a  conclusive  argument,  to  prove  that  the 
construction  is  correct;  and,  if  it  be  correct,  no 
clear  distinction  is  perceived  between  the  power 
to  regulate  vessels  employed  in  transporting 
men  for  hire,  and  property  for  hire.  The  sub¬ 
ject  is  transferred  to  Congress,  and  no  excep- 


44 


tion  to  the  grant  can  be  omitted,  which  is  not 
proved  by  the  words  or  the  nature  of  the  thing. 
A  coasting  vessel  employed  in  the  transporta¬ 
tion  of  passengers,  is  as  much  a  portion  of  the 
American  marine,  as  one  employed  in  the  trans¬ 
portation  of  a  cargo ;  and  no  reason  is  perceived 
why  such  vessel  should  be  withdrawn  from  the 
regulating  power  of  that  government,  which 
has  been  thought  best  fitted  for  the  purpose 
generally.  The  provisions  of  the  law  respect¬ 
ing  native  seamen,  and  respecting  ownership, 
are  as  applicable  to  vessels  carrying  men,  as  to 
vessels  carrying  manufactures;  and  no  reason 
is  perceived  why  the  power  over  the  subject 
should  not  be  placed  in  the  same  hands.  The 
argument  urged  at  the  bar,  rests  on  the  founda¬ 
tion,  that  the  power  of  Congress  does  not  ex¬ 
tend  to  navigation,  as  a  branch  of  commerce, 
and  can  only  be  applied  to  the  subject  inciden¬ 
tally  and  occasionally.  But  if  that  foundation 
be  removed,  we  must  show  some  plain,  intelli¬ 
gible  distinction,  supported  by  the  constitution, 
or  by  reason,  for  discriminating  between  the 
power  of  Congress  over  vessels  employed  in 
navigating  the  same  seas.  We  can  perceive  no 
such  distinction. 

If  we  refer  to  the  constitution,  the  infer¬ 
ence  to  be  drawn  from  it  is  rather  against  the 
distinction.  The  section  which  restrains  Con¬ 
gress  from  prohibiting  the  migration  or  im¬ 
portation  of  such  persons  as  any  of  the  states 
may  think  proper  to  admit,  until  the  year  1808, 
has  always  been  considered  as  an  exception 
from  the  power  to  regulate  commerce,  and  cer- 


45 


tainly  seems  to  class  migration  with  importa¬ 
tion.  Migration  applies  as  appropriately  to  vol¬ 
untary,  as  importation  does  to  involuntary,  ar¬ 
rivals  ;  and,  so  far  as  an  exception  from  a  power 
proves  its  existence,  this  section  proves  that  the 
power  to  regulate  commerce  applies  equally  to 
the  regulation  of  vessels  employed  in  transport¬ 
ing  men,  who  pass  from  place  to  place  volun¬ 
tarily,  and  to  those  who  pass  involuntarily.” 

In  his  concurring  opinion  in  this  case,  Mr.  Justice 
Johnson  said : 

“When  speaking  of  the  power  of  Congress 
over  navigation,  I  do  not  regard  it  as  a  power 
incidental  to  that  of  regulating  commerce;  I 
consider  it  as  the  thing  itself ;  inseparable  from 
it  as  vital  motion  is  from  vital  existence. 

Commerce,  in  its  simplest  signification, 
means  an  exchange  of  goods ;  but  in  the  advance¬ 
ment  of  society,  labour,  transportation,  intelli¬ 
gence,  care  and  various  mediums  of  exchange, 
become  commodities,  and  enter  into  commerce  ; 
the  subject,  the  vehicle,  the  agent  and  their  var¬ 
ious  operations  become  the  subject  of  commer¬ 
cial  regulation.  Ship  building,  the  carrying 
trade,  and  propagation  of  seaman,  are  such  vital 
agents  of  commercial  prosperity,  that  the  nation 
which  could  not  legislate  over  these  subjects, 
would  not  possess  power  to  regulate  commerce.” 
******  “But  it  is  almost  labouring 
to  prove  a  self-evident  proposition,  since  the 
sense  of  mankind,  the  practice  of  the  world,  the 
contemporaneous  assumption,  and  continued  ex¬ 
ercise  of  the  power,  and  universal  acquiesence. 


46 


having  so  clearly  established  the  right  of  Con¬ 
gress  over  navigation,  and  the  transportation 
of  both  men  and  their  goods,  as  not  only  in¬ 
incidental  to,  but  actually  of  the  essence  of,  the 
power  to  regulate  commerce.  As  to  the  trans¬ 
portation  of  passengers,  and  passengers  in  a 
steamboat,  I  consider  it  as  having  been  solemn¬ 
ly  recognized  by  the  State  of  New  York,  as  a 
subject  both  of  commercial  regulation  and  of 
revenue.  She  has  imposed  a  transit  duty  upon 
steamboat  passengers  arriving  at  Albany,  and 
unless  this  be  done  in  the  exercise  of  her  control 
over  personal  intercourse,  as  incident  to  internal 
commerce,  I  know  not  on  what  principle  the  in¬ 
dividual  has  been  subjected  to  this  tax.  The 
subsequent  imposition  upon  the  steamboat  it¬ 
self,  appears  to  be  but  a  commutation,  and  oper¬ 
ates  as  an  indirect  instead  of  a  direct  tax  upon 
the  same  subject.  The  passenger  pays  it  at 
last.” 

And  at  pages  189-190  is  was  said : 

“Commerce  undoubtedly  is  traffic,  but  it  is 
more,  it  is  intercourse.  It  describes  the  com¬ 
mercial  intercourse  between  nations,  and  parts 
of  nations,  in  all  its  branches,  and  is  regulated 
by  prescribed  rules  for  carrying  on  that  inter¬ 
course.” 

In  People  vs.  Raymond,  34  Cal.  1.  c.  497,  it  was  said : 

“The  term  ‘commerce’  as  employed  in  sec¬ 
tion  8  (Constitution  of  the  United  States)  which 
is  under  discussion,  is  not  to  be  construed  as 
limited  to  an  exchange  of  commodities  only,  but 


47 


includes  as  well  ‘intercourse’  with  foreign  na¬ 
tions  and  between  the  several  states,  and  the 
term  'inter course1  includes  the  transportation 
of  passengers  ” 

In  Anderson  vs.  L.  &  N.  R’y.  Co.,  62  Fed.  1.  c.  49,  it 
is  said: 

“The  transportation  of  passengers  is  com¬ 
merce.” 

It  is  none  the  less  commerce  because  it  consists  of 
the  transportation  of  persons  and  property  wholly  with¬ 
in  the  State.  One  is  domestic  and  the  other  interstate, 
but  its  commercial  features  are  identical.  The  means  or 
distance  or  place  of  transportation  does  not  change  the 
character  of  the  business  as  one  of  commerce.  Such  a 
business  is  trade  and  commerce  itself,  as  the  transporta¬ 
tion  of  persons,  as  well  as  property,  is  inseparably  con¬ 
nected  with  and  indispensable  to  that  intercourse  and 
traffic  which  constitutes  trade  and  commerce.  Take  from 
trade  and  commerce  the  transportation  of  either  persons 
or  property  and  but  little  remains. 

It  being  apparent  that  the  business  of  railroad  com¬ 
panies  is  trade  and  commerce,  we  shall  consider  the  ef¬ 
fect  of  the  common  law  and  the  doctrine  of  public  policy 
when  applied  to  combinations  and  agreements  of  the  na¬ 
ture  set  out  in  both  counts  of  the  complaint. 

We  do  not  hesitate  to  say  that  at  common  law  all 
agreements  entered  into  by  two  or  more  parties  for  the 
sole  purpose  of  restraining  competition  in  any  branch 
of  trade  or  commerce,  or  to  fix  or  maintain  prices,  are 
unlawful.  In  such  cases  the  question  of  reasonableness 
or  partial  restraint  is  not  an  element  and  cannot  be  con¬ 
sidered.  There  is  in  such  contracts  no  main ,  lawful  pur¬ 
pose  to  which  the  restraint  is  ancillary,  and  which  is 


48 


reasonably  necessary  to  protect  the  parties  in  the  enjoy¬ 
ment  of  the  benefits  of  the  main,  lawful  purpose,  but  in 
such  contracts  the  main  purpose  is  to  avoid  competition 
and,  therefore,  unlawful. 

Judge  Taft  in  United  States  vs.  Addyston  Pipe  & 
Steel  Company,  54  U.  S.  App.,  723,  after  an  able  and  ex¬ 
haustive  review  of  the  adjudicated  cases,  said: 

“It  would  certainly  seem  to  follow  from  the 
tests  laid  down  for  determining  the  validity  of 
such  an  agreement  that  no  conventional  restraint 
of  trade  can  be  enforced  unless  the  covenant  em¬ 
bodying  it  is  merely  ancillary  to  the  main  pur¬ 
pose  of  a  lawful  contract  and  necessary  to  pro¬ 
tect  the  covenantee  in  the  enjoyment  of  the  legi¬ 
timate  fruits  of  the  contract  or  to  protect  him 
from  the  dangers  of  an  unjust  use  of  those 
fruits  by  the  other  party.  In  Homer  vs.  Graves, 
7  Bing.  735,  Chief  Justice  Tindal,  who  seems  to 
be  regarded  as  the  highest  English  judicial  au¬ 
thority  on  this  branch  of  the  law  (See  Lord 
Macnaghten’s  judgment  in  Nordenfeldt  vs.  The 
Maxim  Nordenfeldt  Guns  and  Ammunition 
Company,  Limited  (1894)  A.  C.,  535,  569),  used 
the  following  language:  ‘We  do  not  see  how 
a  better  test  can  be  applied  to  the  question 
whether  reasonable  or  not  than  by  considering 
whether  the  restraint  is  such  only  as  to  afford 
a  fair  protection  to  the  interests  of  the  party  in 
favor  of  whom  it  is  given,  and  not  so  large  as 
to  interfere  with  the  interests  of  the  public. 
Whatever  restraint  is  larger  than  the  necessary 
protection  of  the  party,  can  be  of  no  benefit  to 
either ;  it  can  only  be  oppressive,  and  if  oppres¬ 
sive,  it  is,  in  the  eye  of  the  law,  unreasonable. 


49 


Whatever  is  injurious  to  the  interests  of  the 
public  is  void,  on  the  grounds  of  public  policy/ 
This  very  statement  of  the  rule  implies  that  the 
contract  must  be  one  in  which  there  is  a  main 
purpose,  to  which  the  covenant  in  restraint  of 
trade  is  merely  ancillary.  The  covenant  is  in¬ 
serted  only  to  protect  one  of  the  parties  from  the 
injury  which,  in  the  execution  of  the  contract 
or  enjoyment  of  its  fruits,  he  may  suffer  from 
the  unrestrained  competition  of  the  other.  The 
main  purpose  of  the  contract  suggests  the  meas¬ 
ure  of  protection  needed  and  furnishes  a  suffi¬ 
ciently  uniform  standard  by  which  the  validity 
of  such  restraints  may  be  judicially  determined. 
In  such  a  case,  if  the  restraints  exceeds  the  ne¬ 
cessity  presented  by  the  main  purpose  of  the 
contract,  it  is  void  for  two  reasons :  First,  be¬ 
cause  it  oppresses  the  covenantor  without  any 
corresponding  benefit  to  the  covenantee,  and, 
second,  because  it  tends  to  a  monopoly;  but 
where  the  sole  object  of  both  parties  in  making 
the  contract,  as  expressed  therein,  is  merely  to 
restrain  competition  and  enhance  or  maintain 
prices  it  would  seem  that  there  was  nothing  to 
justify  or  excuse  the  restraint — that  it  would 
necessarily  have  a  tendency  to  monopoly,  and 
therefore  would  be  void.  In  such  a  case  there 
is  no  measure  of  what  is  necessary  to  the  pro¬ 
tection  of  either  party  except  the  vague  and 
varying  opinions  of  judges  as  to  how  much,  on 
principles  of  political  economy,  men  ought  to  be 
allowed  to  restrain  competition.  There  is  in 
such  contracts  no  main  lawful  purpose,  to  sub¬ 
serve  which  partial  restraint  is  permitted,  and 


15471—4 


50 


by  which  its  reasonableness  is  measured,  but  the 
sole  object  is  to  restrain  trade  in  order  to  avoid 
the  competition  which  it  has  always  been  the 
policy  of  the  common  law  to  foster. 

Much  has  been  said  in  regard  to  the  relax¬ 
ing  of  the  original  strictness  of  the  common  law 
in  declaring  contracts  in  restraint  of  trade  void 
as  conditions  of  civilization  and  public  policy 
have  changed,  and  the  argument  drawn  there¬ 
from  is  that  the  law  now  recognizes  that  com¬ 
petition  may  be  so  ruinous  as  to  injure  the  pub¬ 
lic,  and,  therefore,  that  contracts  made  with  a 
view  to  check  such  ruinous  competition  and  reg¬ 
ulate  prices,  though  in  restraint  of  trade  and 
having  no  other  purpose,  will  be  upheld.  We 
think  that  this  conclusion  is  unwarranted  by  the 
authorities  when  all  of  them  are  considered.” 

And  in  the  same  case  Mr.  Justice  Peckham,  in  af¬ 
firming  the  decision  of  the  circuit  court,  175  U.  S.  211, 
quoted,  with  approval,  from  United  States  vs.  E.  C. 
Knight  Company,  156  U.  S.  16,  as  follows  : 

“It  has  been  earnestly  pressed  upon  us  that 
the  prices  at  which  the  cast  iron  pipe  was  sold 
in  ‘pay’  territory  were  reasonable.  A  great 
many  affidavits  of  purchasers  of  pipe  in  ‘pay’ 
territory,  all  drawn  by  the  same  hand  or  from 
the  same  model,  are  produced,  in  which  the  af¬ 
fiant  says  that  in  their  opinion  the  prices  at 
which  pipe  has  been  sold  by  defendants  have 
been  reasonable.  We  do  not  think  the  issue  an 
important  one,  because,  as  already  stated,  we 
do  not  think  that  at  common  law  there  is  any 
question  of  reasonableness  open  to  the  courts 


51 


with  reference  to  such  a  contract .  Its  tendency 
was  certainly  to  give  defendants  the  power  to 
charge  unreasonable  prices,  had  they  chosen  to 
do  so.” 

In  this  connection  Judge  Marshall,  in  State  ex  inf. 
vs.  Firemen’s  Fund  Ins.  Co.,  152  Mo.  1.  c.  42,  said : 

“It  is  not  necessary  here  to  review  the  cases 
where  courts  have  held  contracts  valid  which 
only  partially  restrained  trade.  It  is  only  nec¬ 
essary  to  call  attention  to  the  fact  that  in  excep¬ 
tional  cases  the  main  purpose  of  the  contract 
was  lawful  and  the  restraint  was  only  a  neces¬ 
sary  incident  or  ancillary  to  the  contracts,  ‘to 
protect  the  covenantee  in  the  enjoyment  of  the 
legitimate  fruits  of  the  contract  or  to  protect 
him  from  the  dangers  of  an  unjust  use  of  those 
fruits  by  the  other  party.’  (United  States  vs. 
Addyston  Pipe  &  Steel  Co.,  54  U.  S.  App.  1.  c. 
747.) 

In  the  case  just  quoted,  Taft,  circuit  judge, 
delivered  the  opinion  of  the  court,  which  was 
concurred  in  by  Mr.  Justice  Harlan  and  Lurton, 
circuit  judge,  and  we  might  well  leave  the  law 
of  the  case  at  bar  to  depend  upon  that  decision, 
for  it  is  a  most  lucid,  learned  and  luminous  ex¬ 
position  of  all  the  law,  ancient  and  modern,  up¬ 
on  the  question  here  under  consideration,  so 
much  so  in  fact,  that  any  attempt  to  enlarge 
upon  the  authorities  cited  and  reviewed  and  the 
reasoning  employed  by  the  learned  judge,  would 
prove  futile,  feeble  and  foolish.  After  review¬ 
ing  the  instances  where  pools  and  trusts  have 
undergone  judicial  scrutiny  and  condemnation, 


52 


Judge  Taft  says :  ‘Upon  this  review  of  the  law 
and  the  authorities,  we  can  have  no  doubt  that 
the  association  of  the  defendants,  however  reas¬ 
onable  the  prices  they  fixed,  however  great  the 
competition  they  had  to  encounter,  and,  however 
great  the  necessity  for  curbing  themselves  by 
joint  agreement  from  committing  financial  sui¬ 
cide  by  ill-advised  competition,  was  void  at 
common  law  because  in  restraint  of  trade  and 
tending  to  a  monopoly/  ” 

In  State  ex  rel.  vs.  Standard  Oil  Company,  218  Mo.  1. 
c.  378,  this  court,  while  discussing  the  subject, 
said: 

“In  support  of  that  contention,  learned 
counsel  for  respondents  argue  that  under  that 
section  of  the  Federal  Constitution  they  had  the 
legal  right  to  make  contracts  in  reasonable  re¬ 
straint  of  trade,  and  that  the  sections  of  the 
statutes  mentioned  prohibit  the  making  of  all 
contracts  in  restraint  of  trade,  those  that  are 
reasonable  as  well  as  those  that  are  unreason¬ 
able  and  unjust,  consequently  the  statute  must 
fail. 

In  answer  to  that  contention  it  may  be  said 
that  counsel  do  not  correctly  state  the  rule  of 
law  regarding  such  contracts.  The  universal  rule 
is  that  two  or  more  parties  may  enter  into  any 
lawful  contract  regarding  any  matter,  and  if 
that  otherwise  legal  contract  only  incidentally 
limits  trade  or  fixes  prices,  then  that  legal  con¬ 
tract  will  not  be  held  void  on  the  ground  that  it 
incidentally  operated  in  restraint  of  trade. 
(Shawnee  Compress  Co.  vs.  Anderson,  209  U. 


53 


S.  423,  434;  Phillips  vs.  lola  Cement  Co.,  61  C. 
C.  A.  1.  e.  20 ;  Whitwell  vs.  Continental  Tobacco 
Co.,  60  C.  C.  A.  1.  c.  299.)  But  if  the  primary 
purpose  of  the  contract  ivas  to  limit  and  restrain 
trade ,  then  the  contract  would  he  void  at  com¬ 
mon  lawy  and  would  not  he  protected  hy  the  con¬ 
stitutional  provision  mentioned ,  however  slight 
that  interference  or  restraint  might  have  heen.” 

In  U.  S.  vs.  Freight  Association,  166  U.  S.  1.  c.  328, 
the  Supreme  Court  of  the  United  States  said : 

“Proceeding,  however,  upon  the  theory  that 
the  statute  did  not  mean  what  its  plain  language 
imported,  and  that  it  intended  in  its  prohibition 
to  denounce  as  illegal  only  those  contracts 
which  were  in  unreasonable  restraint  of  trade, 
the  courts  below  have  made  an  exhaustive  in¬ 
vestigation  as  to  the  general  rules  which  guide 
courts  in  declaring  contracts  to  be  void  as  be¬ 
ing  in  restraint  of  trade,  and,  therefore,  against 
the  public  policy  of  the  country.  In  the  course 
of  their  discussion  of  that  subject  they  have 
shown  that  there  has  been  a  gradual,  though 
great,  alteration  in  the  extent  of  the  liberty 
granted  to  the  vendor  of  property  in  agreeing, 
as  part  consideration  for  his  sale,  not  to  enter 
into  the  same  kind  of  business  for  a  certain  time 
or  within  a  certain  territory.  So  long  as  the 
sale  was  the  bona  fide  consideration  for  the 
promise  and  was  not  made  a  mere  excuse  for  an 
evasion  of  the  rule  itself,  the  later  authorities, 
both  in  England  and  in  this  country,  exhibit  a 
strong  tendency  towards  enabling  the  parties  to 
make  such  a  contract  in  relation  to  the  sale  of 


54 


property,  including  an  agreement  not  to  enter 
into  the  same  kind  of  business,  as  they  may 
think  proper,  and  this  with  the  view  to  granting 
to  a  vendor  the  freest  opportunity  to  obtain  the 
largest  consideration  for  the  sale  of  that  which 
is  his  own.  A  contract  which  is  the  mere  ac¬ 
companiment  of  the  sale  of  property,  and  thus 
entered  into  for  the  purpose  of  enhancing  the 
price  at  which  the  vendor  sells  it,  which  in  effect 
is  collateral  to  such  sale,  and  where  the  main 
purpose  of  the  whole  contract  is  accomplished 
by  such  sale,  might  not  be  included,  within  the 
letter  or  spirit  of  the  statute  in  question.” 

The  agreements  set  out  in  the  two  counts  are  not 
the  accompaniments  of  any  purchase  or  sale  or  any  other 
contract  or  purpose  which  would  justify  a  partial  or 
reasonable  restraint  even  if  the  agreement  were  between 
private  corporations.  But,  if  the  agreements  complained 
of  were  but  ancillary  to  some  main  lawful  purpose  and 
the  restraint  imposed  were  reasonable  and  partial,  which 
it  is  not ,  they  would  yet  be  against  public  policy  when  the 
public  nature  of  these  corporations  is  considered. 

In  Gibbs  vs.  Baltimore  Gas  Co.,  130  U.  S.  408-409,  it 
was  said: 

“The  supplying  of  illuminating  gas  is  a 
business  of  a  public  nature  to  meet  a  public  ne¬ 
cessity,  it  is  not  a  business  like  that  of  an  ordi¬ 
nary  corporation  engaged  in  the  manufacture  of 
articles  that  may  be  furnished  by  individual 
effort  (citing  cases),  hence,  while  it  is  justly 
urged  that  those  rules  which  say  that  a  given 
contract  is  against  public  policy  should  not  be 
arbitrarily  extended  so  as  to  interfere  with  the 


55 


freedom  of  contract,  yet  in  an  instance  of  busi¬ 
ness  of  such  character  that  it  presumably  can¬ 
not  be  restrained  to  any  extent  whatever  with¬ 
out  prejudice  to  the  public  interests,  courts  de¬ 
cline  to  enforce  or  sanction  contracts  imposing 
such  restraint,  however  partial,  because  in  con¬ 
travention  of  public  policy.” 

In  United  States  vs.  Freight  Assn.,  1.  c.  334,  after 
quoting  the  above  extract  from  the  Gibbs  case,  the  court 
said : 

“The  above  extract  from  the  opinion  of  the 
court  is  made  for  the  purpose  of  showing  the  dif¬ 
ference  which  exists  between  a  private  and  a 
public  corporation — that  kind  of  a  public  cor¬ 
poration  which,  while  doing  business  for  remun¬ 
eration,  is  yet  so  connected  in  interest  with  the 
public  as  to  give  a  public  character  to  its  busi¬ 
ness — and  it  is  seen  that  while,  in  the  absence 
of  a  statute  prohibiting  them,  contracts  of  pri¬ 
vate  individuals  or  corporations  touching  upon 
restraints  in  trade  must  be  unreasonable  in 
their  nature  to  be  held  void,  different  consider¬ 
ations  obtain  in  the  case  of  public  corporations 
like  those  of  railroads,  where  it  well  may  be  that 
any  restraint  upon  a  business  of  that  character 
as  affecting  its  rates  of  transportation  must 

thereby  be  prejudicial  to  the  public  interests.” 
*  *  * 

In  the  able  dissenting  opinion  of  Judge  Shiras,  in  the 
case  of  U.  S.  vs.  Trans-Missouri  Freight  Association,  7 
C.  C.  A.  1.  c.  92,  the  distinction  between  the  rule  appli¬ 
cable  to  private  persons,  and  that  applicable  to  railways, 
with  respect  to  combinations,  is  stated  in  the  following 
language : 


56 


“The  right  to  freely  contract  and  combine 
possessed  by  private  parties  engaged  in  private 
pursuits  is  limited  and  denied  when  they  come 
to  deal  with  staple  commodities,  because  the 
whole  community  is  interested  in  these  articles 
of  prime  necessity,  and  any  contract  affecting 
them  affects  the  public;  and  clearly  public  cor¬ 
porations  are  under  a  more  stringent  rule  in 
this  particular. 

Unlike  private  parties  engaged  in  private 
pursuits,  which  only  incidentally,  if  at  all,  af¬ 
fect  the  public  welfare,  corporations  created 
for  the  purpose  of  constructing  and  operating 
the  modem  form  of  public  highways  owe  pri¬ 
marily  a  duty  to  the  public.  They  are  created 
to  subserve  a  public  purpose,  to  wit,  to  furnish 
the  means  for  the  transportation  of  the  people 
and  property  of  the  country,  and  they  are  under 
constant  obligations  to  use  their  corporate  pow¬ 
ers  in  the  interest  of  and  for  the  benefit  of  the 
community  from  which  these  powers  have  been 
derived. 

The  right  to  demand  transportation  for 
one’s  self  or  property  over  such  highways  be¬ 
longs  to  every  member  of  the  community,  and 
the  rate  to  be  paid  for  such  service  is  a  ques¬ 
tion  which  affects  every  one  using  the  high¬ 
way,  and,  in  addition,  every  member  of  the 
community  is  affected  by  the  rates  charged, 
for  the  amount  thereof  enters  into  and  affects 
the  price  of  every  article  that  is  bought  and  sold 
in  the  community.  The  duty  of  transporting 
persons  and  property  over  a  line  of  railway  is 
a  public  duty,  assumed  by  the  corporation  oper- 


57 


ating  the  particular  line,  and  in  the  proper  per¬ 
formance  thereof  the  public  has  a  direct  in¬ 
terest.  The  proper  performance  of  this  duty 
includes  the  rate  of  compensation  to  be  charged 
for  the  services  rendered,  and  this  is  a  question 
in  which  the  public  has  a  direct  and  most  im¬ 
portant  interest,  and  all  contracts  or  combina¬ 
tions  intended  to  affect  the  rate  to  be  charged 
directly  affect  the  public  welfare.  Clearly , 
therefore,  railway  transportation  of  persons 
and  property,  comes  within  the  classes  of  busi¬ 
ness,  which,  in  the  language  of  the  Supreme 
Court  in  Gibbs  vs.  Gas  Co.,  supra,  are  of  such 
a  public  character  that  presumably  they  cannot 
be  restrained  to  any  extent  whatever  without 
prejudice  to  the  public  interest ? 

In  the  opinion  of  the  majority  it  is  prac¬ 
tically  assumed  that  the  same  freedom  to  con¬ 
tract  or  combine  with  others  is  possessed  by  the 
public  corporation  engaged  in  railway  trans¬ 
portation  as  belongs  to  private  parties  engaged 
in  private  pursuits.  It  does  not  so  seem  to  me, 
either  upon  principle  or  authority.  Private 
corporations  are  not  created  for  the  primary 
purpose  of  furthering  the  public  interests,  nor 
do  they  assume  the  performance  of  a  public 
duty.  Conducting  private  enterprises  for 
private  gain,  there  is  no  presumption  that  their 
acts  will  affect  the  public  welfare,  and  hence 
their  freedom  of  contract  and  action  is  not  to 
be  limited  or  denied,  unless  it  clearly  appears 
that  the  interests  of  the  community  will  be  in¬ 
juriously  affected  by  the  action  proposed  to  be 
taken.  On  the  other  hand,  in  the  case  of  public 


corporations  engaged  in  carrying  on  a  public 
enterprise,  it  is  apparent  that  every  course  of 
action  intended  to  affect  the  business  trans¬ 
acted  by  the  corporation  must  of  necessity  af¬ 
fect  the  public  interests.”  *  *  * 

“In  my  judgment,  the  community  is  abso¬ 
lutely  entitled  to  the  protection  against  unfair 
rates  which  is  afforded  by  free  and  unre¬ 
strained  competition  between  the  companies 
engaged  in  the  transportation  business  of  the 
country,  and  any  contract  or  combination  which 
is  intended  to  restrict  competition  in  this  par¬ 
ticular  is  inimical  to  the  public  welfare,  and  is 
therefore  illegal.” 

But  waiving  for  the  moment  all  of  these  considera¬ 
tions  and  applying  the  most  favorable  test  that  respond¬ 
ents  under  any  phase  could  contend  for,  the  agreements 
are  yet  condemned,  as  the  restraint  imposed  is  general 
and  unreasonable.  That  this  combination  is  imposing  in 
array,  wide  in  scope,  general  in  its  influence  and  injuri¬ 
ous  in  effect  on  the  public,  can  admit  of  no  doubt.  By  it, 
all  freight  and  passenger  rates  in  this  State  are  controlled 
and  made  to  bring  sums  they  would  not  command  if  left 
to  the  natural  laws  of  trade  and  commerce  and  the  legiti¬ 
mate  factors  in  the  business  world.  These  sixteen  lines 
traverse  the  State,  touching  its  towns  and  communities, 
penetrating  its  cities  and  commercial  centers,  and  are 
complete  in  their  control  of  traffic  and  transportation, 
and  the  facilities  and  instruments  essential  to  trade  and 
commerce. 

In  such  cases  any  restraint  on  competition  and  free 
and  independent  action  on  the  part  of  each  company  is 
baleful,  but  the  hinderance  set  up  by  this  powerful  com¬ 
bination  and  its  conduct  is  cyclopean.  Its  held  of  opera- 


59 


tion  is  too  wide,  and  its  influence  and  effects  too  general 
to  be  justified  on  any  theory.  It  is  none  the  less  unlaw¬ 
ful  and  baneful,  because  the  rates  fixed  and  maintained 
by  this  method  may  be  within  the  maximum  prescribed 
by  law. 

The  laws  fixing  maximum  rates  do  not  undertake  to 
deterine  the  specific  rate  to  be  charged,  but  leave  this  to 
competition  and  business  elements,  and,  as  was  said  in 
Gulf,  Colorado  &  Santa  Fe  vs.  Texas,  supra,  after  hold¬ 
ing  that  a  combination  and  agreement  between  railroad 
companies  to  fix  and  maintain  rates  were  unlawful : 

“But  it  is  further  argued  that  because  it  has 
not  been  shown  that  they  have  made  charges  for 
freight  or  passengers  in  excess  of  the  limits  al¬ 
lowed  by  law,  their  action  is  not  illegal.  But  we 
do  not  understand  that  the  State  seeks  to  re¬ 
strain  them  for  illegal  charges  made  under  the 
direction  of  the  association,  but  for  doing  an 
illegal  thing  in  entering  into  and  carrying  out 
the  terms  of  the  agreement  for  the  association.” 

In  United  States  vs.  Freight  Association,  166  U.  S. 
1.  c.  339,  the  United  States  Supreme  Court,  in  discussing 
this  proposition,  said : 

“The  claim  that  the  company  has  the  right 
to  charge  reasonable  rates,  and  that,  therefore, 
it  has  the  right  to  enter  into  a  combination  with 
competing  roads  to  maintain  such  rates,  can¬ 
not  be  admitted.  The  conclusion  does  not  fol¬ 
low  from  an  admission  of  the  premise.  What 
one  company  may  do  in  the  way  of  charging  rea¬ 
sonable  rates  is  radically  different  from  enter¬ 
ing  into  an  agreement  with  other  and  competing 
roads  to  keep  up  the  rates  to  that  point.  If  there 


60 


be  any  competition  the  extent  of  the  charge  for 
the  service  will  be  seriously  affected  by  that  fact. 
Competition  will  itself  bring  charges  down  to 
what  may  be  reasonable,  while  in  the  case  of 
an  agreement  to  keep  prices  up,  competition  is 
allowed  no  play;  it  is  shut  out,  and  the  rate  is 
practically  fixed  by  the  companies  themselves 
by  virtue  of  the  agreement,  so  long  as  they 
abide  by  it.”  ******  * 

The  gist  of  the  offense  charged  is  the  combination 
and  conspiracy,  and  not  the  particular  rates  agreed  upon. 
The  offense  would  be  the  same,  in  so  far  as  this  action 
is  concerned,  whether  the  rates  agreed  upon  were  un¬ 
reasonably  low  or  in  excess  of  the  maximum  rates  pre¬ 
scribed  by  law. 

If  each  of  these  companies,  acting  separately  and 
independently  of  each  other  and l  in  open  competition,  saw 
fit  and  was  able  to  charge  the  maximum  rates:  fixed,  the 
State  could  not  complain,  although  its  officers  believed 
such  rates  too  high.  These  respondents  with  their  fran¬ 
chises  are  “entitled  each  to  its  pound  of  flesh,  and,  if  it 
be  so  nominated  in  the  bond,  the  commonwealth  must 
bare  her  bosom  to  all  their  knives  and  let  them  cut  nearest 
the  heart,”  but  their  powers  are  clearly  marked,  and  be¬ 
tween  the  privileges  granted  to  them  and  those  reserved 
to  the  State,  the  line  is  distinctly  drawn,  and,  if  they 
cross  it,  they  should  be  driven  back  under  the  lash  of  the 
law. 

In  Morris  Run  Coal  Company  vs.  Barclay  Coal  Com¬ 
pany,  68  Pa.  State,  173,  five  companies  combined  together 
to  govern  the  supply  and  price  of  coal  in  all  the  markets 
from  the  Hudson  to  the  Mississippi  river  and  from  Penn¬ 
sylvania  to  the  lakes. 


V 


61 


In  that  case  the  Court  said : 

“Singly  each  company  might  have  sus¬ 
pended  deliveries  and  sales  of  coal  to  suit  its 
own  interest,  and  might  have  raised  the  price, 
even  though  this  might  have  been  detrimental 
to  the  public  interest.  There  is  a  certain  free¬ 
dom  which  must  be  allowed  to  every  one  in  the 
management  of  his  own  affairs.  When  compe¬ 
tition  is  left  free,  individual  error  or  folly  will 
generally  find  its  correction  in  the  conduct  of 
others,  but  here  is  a  combination  of  all  the  com¬ 
panies  operating  in  the  Blossburg  and  Barclay 
mining  regions:  and  controlling  their  entire  prod¬ 
ucts.  This  combination  has  a  power  in  its  con¬ 
federated  form  which  no  individual  action  can 
confer.  The  public  interest  must  succumb  to  it, 
for  it  has  left  no  competition  free  to  correct  its 
baneful  influence.  *  *  * 

Such  a  combination  is  more  than  a  contract ; 
it  is  an  offense.  T  take  it/  said  Gibson,  J.,  ‘a 
combination  is  criminal  whenever  the  act  to  be 
done  has  a  necessary  tendency  to  prejudice  the 
public,  or  to  oppress  individuals  by  unjustly  sub¬ 
jecting  them  to  the  power  of  confederates  and 
giving  effect  to  the  purpose  of  the  latter, 
whether  of  extortion  or  of  mischief/ 

“In  all  such  combinations  where  the  pur¬ 
pose  is  injurious  or  unlawful,  the  gist  of  the  of¬ 
fense  is  a  conspiracy.  Men  can  often  do  by  the 
combination  of  many  what,  severally,  no  one 
could  accomplish,  and  even  what,  when  done  by 
by  one,  would  be  innocent. 

It  was  held  in  Commonwealth  vs.  Eberle,  3 
S.  N.  R.  9,  that  it  was  an  indictable  conspiracy 


62 


for  a  portion  of  a  German  Lutheran  congrega- 
gation  to  combine  and  agree  together  to  prevent 
another  portion  of  the  congregation,  by  force 
and  arms,  from  using  the  English  language  in 
the  worship  of  God  among  the  congregation.  So 
a  confederation  to  assist  a  female  infant  to 
escape  from  her  father’s  control,  with  a  view  to 
marry  her  against  his  will,  is  indictable  as  a  con¬ 
spiracy  at  common  law,  while  it  would  have  been 
no  criminal  offense,  if  one  alone  had  induced  her 
to  elope  with  and  marry  him. 

Miffin  vs.  Commonwealth,  5  W.  &  S.  461. 

One  man,  or  many,  may  hiss  an  actor,  but 
if  they  conspire  to  do  it,  they  may  be  punished. 
Per  Gibson,  C.  J.,  Hood  vs.  Palmer,  8  Barr  238 ; 
2  Russell  on  Crimes,  556. 

And  says  Coulter,  J.,  ‘The  concentrated 
energy  of  several  combined  wills,  operating 
simultaneously  and  by  concert,  upon  one  indi¬ 
vidual,  is  dangerous,  even  to  the  cautious  and 
circumspect,  but,  when  brought  to  bear  upon  the 
unwary  and  unsuspecting,  it  is  fatal.’ 

There  is  potency  in  numbers,  when  com¬ 
bined,  which  the  law  cannot  overlook  where  in¬ 
jury  is  the  consequence.” 

In  Heim  Brewing  Company  vs.  Belinder,  97  Mo.  App. 

3.  c.  71,  Judge  Ellison  said: 

“There  are  acts  which  become  wrongful  on 
account  of  the  number  doing  such  acts;  mani¬ 
festly,  the  right  of  a  single  individual  is  of  no 
consequence  in  determining  the  character  of  the 
act  of  the  whole  number.  Thus,  it  is  not  un- 


63 


lawful  for  one  mant  to  stop  on  a  highway  re¬ 
served  for  pedestrians,  yet  it  is  clearly  unlawful 
for  a  number  to  do  so,  especially  by  concerted 
action.  In  such  instance  the  act  of  the  one  man 
was  not  harmful  to  any  appreciable  extent,  while 
the  act  of  the  number  obstructed  the  highway 
and  became  unlawful.  And  so  it  is  not  unlaw¬ 
ful,  nor  appreciably  harmful,  for  one  dealer  to 
raise  the  price  of  an  article  of  absolute  neces¬ 
sity;  for  in  the  natural  course  of  trade,  other 
dealers  will  supply  the  necessity  at  a  price  fixed 
by  competition.  But  it  is  unlawful  and  harm¬ 
ful  for  all  dealers  to  combine  and  by  agreement 
raise  the  price.  The  act  of  the  one  dealer  passes 
unnoticed  by  the  public,  while  the  same  act  by 
the  combination  interferes  with  trade  and  cre¬ 
ates  distress.” 

In  Commonwealth  vs.  Carlisle,  Brightly  [N.  P.]  36, 
Judge  Gibson  said: 

“There  is  between  the  different  parts  of  the 
body  politic  a  reciprocity  of  action  on  each  other, 
which,  like  the  action  of  antagonizing  muscles 
in  the  natural  body,  not  only  prescribes  to  each 
its  appropriate  state  and  condition,  but  regulates 
the  motion  of  the  whole.  The  effort  of  an  indi¬ 
vidual  to  disturb  this  equilibrium  can  never  be 
perceptible,  nor  carry  the  operation  of  his  in¬ 
terest  on  that  of  any  other  individual,  beyond 
the  limits  of  fair  competition;  but  the  increase 
of  power  by  the  combination  of  means,  being  in 
geometrical  proportion  to  the  number  concerned, 
an  association  may  be  able  to  give  an  impulse, 


64 


not  only  oppressive  to  individuals,  but  mischiev¬ 
ous  to  the  public  at  large;  and  it  is  the  employ¬ 
ment  of  an  engine  so  powerful  and  dangerous, 
that  gives  criminality  to  an  act  that  would  be 
perfectly  innocent,  at  least  in  a  legal  view,  when 
done  by  an  individual.” 

In  Bailey  vs.  Master  Plumbers,  103  Tenn.  118,  the 
Supreme  Court  of  Tennessee  said: 

“A  combination  has  hurtful  powers  and  in¬ 
fluences  not  possessed  by  the  individual.  It 
threatens  and  impairs  rivalry  in  trade,  covets 
control  in  prices,  seeks  and  obtains  its  own  ad¬ 
vancement  at  the  expense  and  in  the  oppression 
of  the  public.” 

In  State  vs.  Glidden,  55  Conn.  75,  it  was  said  by  the 
Supreme  Court  of  Connecticut  on  the  same  subject: 

“Any  one  man,  or  any  one  of  several  men, 
acting  independently,  is  powerless;  but  when 
several  combine  and  direct  their  united  energies 
to  the  accomplishment  of  a  bad  purpose,  the  com¬ 
bination  is  formidable.  Its  power  for  evil  in¬ 
creases  as  its  numbers  increase.” 

In  State  ex  rel.  vs.  Stock  Exchange,  211  Mo.  1.  c.  193, 
Judge  Valliant,  speaking  for  the  Court,  said : 

“It  is  the  combination  or  agreement  that 
results  in  restraint  of  trade  that  the  statute  de¬ 
nounces,  whether  the  result  is  accomplished  by 
the  act  of  each  individual  on  his  own  account 
doing  as  he  agreed  to  do,  or  by  the  joint  action 
of  all.  The  result  may  be  the  same  whether 
each  individual  acting  for  himself  pursues  the 


65 


course  marked  out  by  the  combination,  or 
whether  they  all  join  in  a  united  transaction. 
It  is  the  combination  to  accomplish  that  result 
that  the  statute  is  aimed  to  prevent.” 

The  whole  law,  whether  statutory  or  common,  against 
monopoly  and  combinations  in  restraint  of  trade,  com¬ 
merce  and  competition,  is  based  upon  the  common  knowl¬ 
edge  that  there  is  great  danger  in  confederated  power 
that  does  not  attach  to  individual  action.  If  this  were  not 
true,  no  justification  could  be  offered  for  anti-trust  laws, 
or  any  of  the  countless  court  decisions  applying  such  laws. 

In  but  few,  if  any,  of  the  numberless  cases  where 
combinations  have  been  condemned  by  the  courts,  have 
the  decisions  been  on  the  ground  that  the  rates  or  prices 
fixed  were,  in  themselves,  unlawful,  but,  almost  invaria¬ 
bly,  it  has  been  because  they  were  fixed  by  unlawful 
agreement  and  combination.  And  here  we  pause  to  in¬ 
quire  what  reason  can  exist  why  railroad  companies, 
whose  business  is  trade  and  commerce,  should  not  be  sub¬ 
jected  to  the  rules  and  laws  governing  commerce;  why 
should  they  be  singled  out  from  all  the  great  interests 
of  the  State  and  alone  be  authorized  to  combine  and  pre¬ 
vent  competition;  why  should  not  men  who  put  their 
means,  capital  and  skill  in  manufactories,  wholesale  and 
retail  stores  and  other  industries;  why  should  not  the 
farmer,  the  artisan,  the  laborer  and  trader  be  just  as 
much  entitled  to  protection  against  competition  as  the 
railroad  company?  The  natural  result  of  preventing  such 
competition  is  to  keep  up  rates,  to  weaken  and  impair  the 
service  and  destroy  the  chief  inducement  for  improved 
facilities,  as,  when  competition  is  free  and  open  the  best 
equipped  and  managed  road,  the  one  giving  the  lowest 
rates  and  best  service  will  get  the  bulk  of  business,  and 


15471—5 


66 


the  poorer  roads  must  put  themselves  in  better  condition, 
if  they  get  business. 

Under  such  circumstances  each  road  is  on  the  alert, 
active  and  progressive,  courteous  and  accommodating, 
ever  struggling  to  attract  to  it  the  traffic  of  the  State, 
and  holding  out  inducements  by  giving  the  lowest  rates 
and  superior  service.  The  public  is  thus  benefited;  but, 
remove  this  competition  and  let  rates  be  fixed  by  agree¬ 
ment — this  healthful  condition  changes.  To  raise  or 
maintain  rates  above  those  which  would  exist  under  open 
competition  is  to  decrease  the  business  of  the  whole  coun¬ 
try,  including  that  of  railroads,  to  extort  from  the  people, 
for  the  benefit  of  the  company,  unnatural  and  unfair 
rates,  and  to  deprive  the  whole  public  of  rights  and  ben¬ 
efits  to  which  they  are  entitled  from  the  “life  of  trade” 
and  industrial  conditions. 

We  repeat  that  there  can  exist  no  reason  in  either 
principle  or  practice  why  such  companies  should  be  per¬ 
mitted  to  combine  and  destroy  competition,  or  any  reason 
why  the  public  should  not  protect  itself  against  such  a 
menace. 

In  Northern  Securities  Co.,  vs.  United  States,  193 
U.  S.  1.  c.  342-343,  the  Supreme  Court  of  the  United 
States  said: 

“Now,  the  court  is  asked  to  adjudge  that,  if 
held  to  embrace  the  case  before  us,  the  Anti- 
Trust  Act  is  repugnant  to  the  Constitution  of 
the  United  States.  In  this  view  we  are  unable 
to  concur.  The  contention  of  the  defendants 
could  not  be  sustained  without,  in  effect,  over¬ 
ruling  the  prior  decisions  of  this  court  as  to  the 
scope  and  validity  of  the  Anti-Trust  Act.  If,  as 
the  court  has  held,  Congress  can  strike  down  a 
combination  between  private  persons  or  private 


67 


corporations  that  restrains  trade  among  the 
states  in  iron  pipe  (as  in  Addyston  Pipe  &  Steel 
Co.  vs.  United  States),  or  in  tiles,  grates  and 
mantels  (as  in  Montague  vs.  Lowry),  surely  it 
ought  not  to  be  doubted  that  Congress  has  power 
to  declare  illegal  a  combination  that  restrains 
commerce  among  the  states,  and  with  foreign 
nations,  as  carried  on  over  the  lines  of  compet¬ 
ing  railroad  companies  exercising  public  fran¬ 
chises,  and  engaged  in  such  commerce.  We  can¬ 
not  agree  that  Congress  may  strike  down  com¬ 
binations  among  manufacturers  and  dealers  in 
iron  pipe,  tiles,  grates  and  mantels  that  restrain 
commerce  among  the  states  in  such  articles,  but 
may  not  strike  down  combinations  among  stock¬ 
holders  of  competing  railroad  carriers,  which 
restrain  commerce  as  involved  in  the  transpor¬ 
tation  of  passengers  and  property  among  the  sev¬ 
eral  states.  If  private  parties  may  not,  by  com¬ 
bination  among  themselves,  restrain  interstate 
and  international  commerce  in  violation  of  an 
act  of  Congress,  much  less  can  such  restraint 
be  tolerated  when  imposed  or  attempted  to  be 
imposed  upon  commerce  as  carried  on  over  pub¬ 
lic  highways.  Indeed,  if  the  contentions  of  the 
defendants  are  sound,  why  may  not  all  the  rail¬ 
way  companies  in  the  United  States,  that  are 
engaged,  under  state  charters,  in  interstate  and 
international  commerce,  enter  into  a  combina¬ 
tion  such  as  the  one  here  in  question,  and  by 
the  device  of  a  holding  corporation  obtain  the 
absolute  control  throughout  the  entire  country 
of  rates  for  passengers  and  freight,  beyond  the 
power  of  Congress  to  protect  the  public  against 


68 


their  exactions  ?  The  argument  in  behalf  of  the 
defendants  necessarily  lead  to  such  results,  and 
places  Congress,  although  invested  by  the  people 
of  the  United  States  with  full  authority  to  regu¬ 
late  interstate  and  international  commerce,  in 
a  condition  of  utter  helplessness,  so  far  as  the 
protection  of  the  public  against  such  combina¬ 
tions  is  concerned/' 

Beach  on  Monopolies  and  Industrial  Trusts,  para¬ 
graph  149,  page  469,  says : 


“Any  combination  of  railway  companies, 
the  object  of  which  is  to  restrain  competition  by 
establishing  and  maintaining  a  uniform  charge 
for  the  transportation  of  freight  or  of  passen¬ 
gers,  is  illegal  and  void.  It  is  the  rule  that  con¬ 
tracts  or  agreements  of  this  character  are  void 
as  in  contravention  of  public  policy,  and  in  many 
states  such  agreements  are  rendered  nugatory 
by  constitutional  and  statutory  enactments." 


Noyes  on  Intercorporate  Relations,  in  paragraph  372, 
says: 

9  d  01  i'j. 

“The  combination  is  injurious  to  public  wel¬ 
fare,  because  it  is  inimical  to  public  policy;  if 
involving  quasi  public  corporations,  it  breaks 
the  primary  contract  with  the  state  ” 


onx; 


And  paragraph  373 : 


-Bind  moo  &  o: 

7r  “A  private  corporation  in  entering  such 

combination  exceeds  its  powers  in  a  manner 
v-  ;rrt ■■ ;  prejudicial  to  the  public  interests.  A  quasi  pub - 

^  J  ~  .  .**  A  y  *  — a  m  w* 

r  lie  corporation  fails  in  the  discharge  of  its  public 


*  obligations  and  transgresses  the  law  of  its  crea¬ 

tion 


69 


Spelling,  on  Trusts  and  Monopolies,  paragraph  82, 
page  127,  says : 

“No  agreement  can  be  fraught  with  more 
serious  import  to  the  material  interests  of  the 
community  than  one  whereby  a  monopoly,  with 
all  the  power  for  evil  the  term  implies,  is  created 
among  those  upon  whom  the  state  has  conferred 
important  privileges  of  a  public  nature,  and 
upon  whom  the  public  are  dependent  for  com¬ 
mon  service,  whether  in  the  form  of  transpor¬ 
tation  or  other  necessities  and  conveniences. 
Such  agreements  are  viewed  with  great  jealousy 
by  the  courts,  and  the  rule  of  public  policy  is 
rigidly  applied  to  them.” 

Greenhood,  on  Public  Policy,  p.  2,  says : 

“By  public  policy  is  intended  that  principle 
of  the  law  which  holds  that  no  subject  can  law¬ 
fully  do  that  which  has  a  tendency  to  be  in¬ 
jurious  to  the  public,  or  against  the  public 
good,  which  may  be  termed  the  policy  of  the  law, 
or  public  policy  in  relation  to  the  administration 
of  the  law.” 

This  definition  seems  well  supported  by  the  case  cited 
by  the  author  (pp.  172,  et  seq.) 

“There  can  be  no  doubt,  but  that  all  con¬ 
federacies,  whatsoever,  wrongfully  to  prejudice 
a  third  person,  are  highly  criminal  at  common 
law.” 

1  Hawkins,  P.  C.  72,  Sec.  2. 

In  discussing  a  contract  between  a  railroad  company 
and  lake  transportation  company,  the  Supreme  Court  of 


70 


Minnesota,  in  the  case  of  Stewart  vs.  The  Erie  &  Western 
Transp.  Co.  et  al.,  17  Minn.  1.  c.  395,  said : 

“A  monopoly  is  not  necessarily  unlawful, 
for  it  may  be  created,  permitted  or  tolerated  by 
law.  But  we  agree  with  the  plaintiff's  counsel, 
and  with  the  cases  cited  by  him,  that  it  is 
against  the  general  policy  of  the  law  to  destroy 
or  interfere  with  free  competition,  or  to  permit 
such  destruction  or  interference." 

That  any  agreement  which  relaxes  in  any  degree 
competition  among  quasi  public  corporations  is  ilegal  is 
clear  from  the  cases. 

The  rule  is  stated  in  the  case  of  State  ex  rel.  vs. 
Portland  Nat.  Gas.  Co.,  153  Ind.  1.  c.  488-489,  the  court 
saying: 

Tt  is  an  old  and  familiar  maxim  that  ‘Com¬ 
petition  is  the  life  of  trade,'  and  whatever  act 
destroys  competition,  or  even  relaxes  it,  upon 
the  part  of  those  who  sustain  relations  to  the 
public,  is  regarded  by  the  law  as  injurious  to 
public  interests,  and  is  therefore  deemed  to  be 
unlawful,  on  the  grounds  of  public  policy. 
Greenhood  on  Public  Policy,  pp.  654,  655;  Chi¬ 
cago,  etc.,  Co.  vs.  People's,  etc.,  Co.,  supra; 
Gibbs  vs.  Consolidated,  etc.,  Co.,  130  U.  S.  396; 
Hooker  vs.  Vandewater,  4  Denio,  349;  Con¬ 
sumers  Oil  Co.  vs.  Nunnemaker,  142  Ind.  560; 
Beach  on  Pr.  Corp.,  pr.  54,  55." 

“The  authorities  affirm,  as  a  general  rule, 
that,  if  the  act  complained  of,  by  its  results,  will 
restrict  or  stifle  competition,  the  law  will  re¬ 
gard  such  an  act  as  incompatible  with  public 
policy,  without,,  any  proof  of  evil  intent  on  the 


71 


part  of  the  actor  or  actual  injury  to  the  public. 
The  inquiry  is  not  as  to  the  degree  of  injury  in¬ 
flicted  upon  the  public;  it  is  sufficient  to  know 
that  the  inevitable  tendency  of  the  act  is  injuri¬ 
ous  to  the  public.  Central  Ohio,  etc.,  Co.  vs. 
Guthrie,  35  Ohio  St.,  666;  Swan  vs.  Chorpen- 
ning,  20  Cal.  182;  State  vs.  Standard  Oil  Co., 
49  Ohio  St.,  137 ;  Gibbs  vs.  Smith,  115  Mass. 
592 ;  Richardson  vs.  Buhl,  77  Mich.  632 ;  Pacific 
Factor  Co.  vs.  Adler,  90  Cal.  110;  Beach  on 
Monop.  and  Ind.  Trusts,  pr.  82.” 

With  reference  to  the  rule  condemning  unlawful 
combinations,  it  was  said  in  Knight  &  Jilson  Co.  vs.  Miller, 
87  N.  E.  1.  c.  831,  that: 

“The  true  test  is  whether  the  contract  or 
combination,  in  its  apparent  purpose  or  natural 
consequence,  places  a  restriction  upon  competi¬ 
tion,  or  tends  to  create  a  monopoly,  or  is  inimi¬ 
cal  to  trade  or  commerce,  and  it  is  not  necessary 
that  a  pure  monopoly  is  effected,  or  that  the  re¬ 
straint  is  a  complete  one.” 

In  the  same  case,  page  830,  it  is  said  that : 

“The  law  supplies  the  intent,  and  will  not 
inquire  into  the  extent  of  the  tendency,  but  puts 
the  ban  on  the  act,  upon  the  ground  of  its  ten¬ 
dency,  and  does  not  await  the  accomplished  fact, 
nor  does  it  depend  upon  the  fact  as  to  whether 
a  complete  monopoly  results.  The  very  exist¬ 
ence  of  a  power  to  restrain  competition  is  a  re¬ 
straint  on  competition.” 

In  State  vs.  Duluth  Board  of  Trade,  107  Minn.  506, 
et  seq.,  the  Supreme  Court  of  Minnesota  had  under  con- 


72 


sideration  the  anti-trust  statute  of  Minnesota  with  re¬ 
spect  to  its  applicability  to  the  association  mentioned. 

The  court  reviewed  the  authorities  at  length  and  in 
detail,  and  though  holding  that  the  Duluth  Board  of 
Trade  was  not  a  combination  within  the  meaning  of  the 
Minnesota  act,  laid  down  the  general  rule  as  follows: 
(1.  c.  543.) 

“Where  the  statute  prohibits  a  specific 
thing,  that  fact,  of  course,  furnishes  an  all-suffi¬ 
cient  reason  for  the  decision,  and,  as  the  State 
statutes  generally  go  more  into  detail  than  the 
Federal  statutes,  the  State  decisions  are  less 
controlled  by  general  considerations.  When  the 
legality  of  the  particular  act  is  to  be  tested  by 
whether  it  violates  general  statutory  prohibi¬ 
tions  upon  restraints  of  trade  or  commerce,  the 
courts  give  various  reasons  for  their  conclu¬ 
sions.  Different  forms  of  expression  are  used; 
but,  when  reduced  to  the  lowest  terms,  it  seems 
that  if  any  one  thing  may  be  said  to  be  the  test, 
it  is  the  effect  upon  competition.  Combinations 
are  not  per  se  illegal,  any  more  than  are  con¬ 
tracts,  agreements  and  understandings  gener¬ 
ally;  but  when  the  purpose  of  either  is  to  de¬ 
stroy  competition  in  trade  or  commerce,  the  par¬ 
ticular  transaction  falls  within  the  prohibitions 
of  the  anti-trust  statute.  The  acts  which  are 
specifically  forbidden  by  the  statute  are  contrary 
to  the  public  policy  of  the  state,  because  they 
are  thus  forbidden  (Stewart  vs.  Erie  &  W. 
Transp-  Co.,  17  Minn.  348  (372),  and  the  effect 
upon  competition  furnishes  a  reasonably  accu¬ 
rate  test  for  cases  which  arise  under  the  general 
language  of  the  statute.  The  definition  of  mo- 


* 


73 


nopoly  involves  the  same  principle,  and  con¬ 
tracts  and  combinations  which  tend  to  create  a 
t  monopoly  are  against  public  policy,  and  there¬ 

fore  illegal,  because  they  deprive  the  community 
of  the  benefits  of  competition  and  thus  place  the 
power  to  control  production  or  fix  prices  in  the 
hands  of  a  few  persons.” 

And  in  the  same  case  the  court  held  that  “restrain¬ 
ing  trade”  and  “preventing  competition”  were  convertible 
terms.  The  court,  discussing  the  articles  of  association 
of  the  Duluth  Board  of  Trade  and  the  bearing  of  the 
Minnesota  Anti-Trust  statute  upon  the  agreement  evi¬ 
denced  by  them,  said  (1.  c.  523)  : 

“To  say  that  a  combination  restrains  trade 
and  prevents  competition  is  a  repetition  of  the 
same  idea — the  giving  of  two  names  to  the  same 
thing.  Whatever  restrains  trade  prevents  com¬ 
petition,  and  whatever  prevents  competition  in 
trade  necessarily  restrains  trade.  The  word 

i  y 

'monopoly/  which  plays  so  great  a  part  in  the 
law,  conveys  the  same  idea,  because  where  there 
is  monopoly  there  can  be  no  competition.  Pro¬ 
duction,  and  hence  prices,  are  under  the  control 
of  the  monopolist,  to  the  possible  and  probable 
injury  of  the  public.  Freedom  of  trade  requires 
competition.  Without  one  the  other  cannot  ex¬ 
ist,  and  whatever  restrains  one  restricts  the 
other.  It  is  true  that  unrestrained  and  unregu¬ 
lated  competition  may  destroy  what  it  is  de¬ 
signed  to  preserve;  but  the  theory  of  law  and 
legislation  still  is  that  the  welfare  of  the  public 
requires  that  competition  in  trade  and  commerce 
shall  exist,  in  order  that  freedom  of  trade  may 
be  maintained.” 


74 


In  State  ex  inf.  vs.  Firemen's  Fund  Insurance  Co., 
152  Mo.  1.  c.  43,  this  court  said : 

“A  trust  is  a  contract,  combination,  con¬ 
federation  or  understanding,  express  or  implied, 
between  two  or  more  persons  to  control  the 
price  of  a  commodity  or  service,  for  the  benefit 
of  the  parties  thereto,  and  to  the  injury  of  the 
public,  and  which  tends  to  create  a  monopoly. 
As  was  said  by  Chief  Justice  Fuller  in  United 
States  vs.  Knight  Co.,  156  U.  S.  1.  c.  16,  ‘Again 
all  the  authorities  agree  that  in  order  to  vitiate 
a  contract  or  combination  it  is  not  essential  that 
its  result  should  be  a  complete  monopoly;  it  is 
sufficient  if  it  really  tends  to  that  end  and  to 
deprive  the  public  of  the  advantages  which  flow 
from  free  competition.’  In  the  United  States 
vs.  Trans-Missouri  Freight  Association,  166  U. 
S.  1.  c.  342,  it  was  said:  ‘For  these  reasons  the 
suit  of  the  government  can  be  maintained  with¬ 
out  proof  of  the  allegation  that  the  agreement 
was  entered  into  for  the  purpose  of  restraining 
trade  or  commerce  or  for  maintaining  rates 
above  what  was  reasonable.  The  necessary  ef¬ 
fect  of  the  agreement  is  to  restrain  trade  or 
commerce,  no  matter  what  the  intent  was  on 
the  part  of  those  who  signed  it.’  Just  so  here, 
the  practice  of  the  members  of  the  Social  Club 
had  the  effect  of  maintaining  the  Fetter  rates, 
and  hence  constituted  it  a  trust,  no  matter 
whether  the  members  intended  it  to  have  that 
effect  or  not  [and  we  have  no  doubt  they  did  so 
intend  it],  and  no  matter  whether  they  also  in¬ 
tended  it  to  be  ‘social’  in  the  manner  hereinbe¬ 
fore  indicated  or  not. 


75 


In  the  oldens  times  such  practices  were 
called  contracts  in  restraint  of  trade.  Nowa¬ 
days  they  are  called  trusts.  There  is  no  differ¬ 
ence  in  the  principle.  There  is  a  difference  in 
the  extent  and  methods.  Those  the  courts  con¬ 
demned  long  ago  were  as  mere  saplings  com¬ 
pared  to  the  mammoth  oaks,  when  considered 
alongside  of  those  of  today.  When  the  evils  to  the 
public  interests  that  flow  from  these  trust  com¬ 
binations  are  attempted  to  be  described,  words 
become  mere  weaklings  in  their  power  of  ex¬ 
pression,  and  one  stands  appalled  at  the  help¬ 
lessness  of  the  people  outside  of  judicial  aid.” 

In  the  case  of  Chicago,  etc.,  R.  Co.  vs.  Southern  R. 
Co.,  38  Ind.  App.  1.  c.  244-245,  in  discussing  the  duty  of 
courts  to  condemn  contracts  void  as  against  public  policy, 
it  is  said : 


“The  present  action  is  one  in  which  it  is 
not  only  appropriate  for  the  court  to  consider  the 
contract  made  by  these  parties,  but  the  duty  of 
the  court  to  the  public,  against  whom  the  con¬ 
tract  in  question  is  directed,  calls  upon  it  to  do 
so. 

That  duty  cannot  be  put  aside  until  appel¬ 
lant  comes  into  court  asking  that  the  illegal 
clause  be  enforced.  The  presumption  is  that  it 
will  not  need  ever  to  do  this.  It  cannot  be  de¬ 
ferred  until  some  quarryman  or  citizen  insti¬ 
tutes  a  proceeding  to  declare  its  invalidity.  The 
fallacy  of  such  an  idea  can  in  no  way  be  so 
clearly  exposed  as  by  an  illustration,  extreme  in 
terms,  but  equivalent  in  principle.  Preliminary 
to  the  illustration,  it  may  be  recalled  that  this 


76 


/ 


court  has  declared :  ‘It  is  now  settled  here,  that 
contracts  which  are  void  at  common  law,  be¬ 
cause  they  are  against  public  policy,  like  con¬ 
tracts  which  are  prohibited  by  statute,  are  ille¬ 
gal  as  well  as  void.  They  are  prohibited  by  law 
because  they  are  considered  vicious,  and  it  is 
not  necessary  to  impose  a  penalty  in  order  to 
render  them  illegal.”  Nave  vs.  Wilson  (1895), 
12  Ind.  App.  38.” 

Mr.  Greenhood,  pages  662  and  663  of  his  work  on 
Public  Policy,  dealing  with  agreements  among  railroads, 
the  tendency  of  which  is  to  restrict  competition,  says : 

“A  few  of  the  reasons  urged  by  the  railroad 
advocates  are  certainly  entitled  to  no  slight  con¬ 
sideration.  But  it  is  also  true  that  the  difficul¬ 
ties  which  are  urged  as  justifying  these  arrange¬ 
ments  are  capable  of  being  estimated  before  the 
investment  of  the  capital,  the  possible  loss  of 
which  they  so  much  deplore;  that  they  have 
reaped  advantages  which  private  capital  and 
common  carriers  generally  have  not  enjoyed,  not 
the  least  of  which  is  taxation  for  their  benefit, 
and,  if  any  enterprise  is  public,  and  under  the 
deepest  obligations  to  the  public,  and  duty  bound 
to  shape  its  course  to  subserve  the  public  inter¬ 
est,  it  is  that  which  prompts  the  maintenance 
of  railroads.  Experience  teaches  us  that  in 
union  there  is  strength,  and  that  we  have  more 
to  fear  from  associated  capital  than  from  indi¬ 
vidual  capital ;  that  capitalists  generally  sympa¬ 
thize  with  each  other,  and  that  no  regard  for 
public  interest  will  allay  any  desire  on  their  part 
to  make  their  investment  more  profitable;  that 


77 


were  we  to  recognize  the  power  of  these  corpor¬ 
ations  to  ally  themselves  in  the  manner  planned 
for  us,  we  would  be  obliged  to  satisfy  ourselves 
that  there  was  cause  for  them,  i.  e.,  that  their 
object  was  to  put  an  end  to  ruinous  competition, 
and  it  is  plain  that  upon  public  agents  would  de- 

4 

volve  the  duty  of  ascertaining  this  fact;  and 
when  we  know  of  the  comparative  facility  with 
which  an  honest  financial  showing  could  be 
withheld,  and  a  discouraging  account  produced, 
and  of  the  comparative  ease  with  which  such 
public  agents  could  be  corrupted,  it  may  be  well 
to  ask  whether  it  would  not  be  more  advisable 
to  withhold  from  them  judicial  sanction  entire¬ 
ly,  and  let  all  come  within  the  ban  of  the  law, 
as  is  the  course  pursued  with  regard  to  strikes.” 

Chief  Justice  Cooley,  writing  upon  the  subject  of 
railway  pooling  arrangements,  indicated  his  belief  that 
combinations  calculated  to  restrict  competition  were  ille¬ 
gal.  Judge  Cooley,  in  the  Railway  Review  of  April  26, 
1884,  used  the  following  language: 

“A  pooling  arrangement  is  a  combination; 
and  all  combinations  in  a  business  which  so  inti¬ 
mately  concerns  the  public  look  like  attempts 
to  establish  a  monopoly,  and  may  sometimes  re¬ 
sult  in  establishing  one.  To  monopoly  the  pub¬ 
lic  is  instinctively  hostile,  because  it  takes  from 
them  the  power  of  dealing  on  equal  terms  with 
those  who  control  it.  Besides,  a  combination 
that  has  for  its  object  to  check  competition, 
seems  to  stand  in  hostility  to  the  industrial  max¬ 
im  that  competition  is  the  life  of  trade,  a  maxim 
which  from  time  immemorial  has  been  generally 


78 


prevalent,  and  is  commonly  supposed  to  be  one 
admitting  of  no  question,  and  of  universal  appli¬ 
cation.  The  advantages  of  unrestricted  com¬ 
petition  are  apparent  to  the  public  in  industrial 
life  all  about  us;  and  while  in  some  kinds  of 
business  this  is  sharp,  yet  selfishness  is  general¬ 
ly  sufficiently  active  and  sufficiently  intelligent 
to  prevent  its  becoming  ruinous.  It  does  not 
detract  from  the  worth  or  soundness  of  the 
maxim  that  under  the  operation  of  unrestricted 
competition  individual  disasters  must  occur;  for 
when  this  hapens  it  is  very  likely  to  be  found 
either  that  the  parties  did  not  understand  the 
business  they  were  engaged  in,  or  managed  bad¬ 
ly,  or  lacked  the  necessary  capital,  or  in  some 
other  particulars  were  inadequately  equipped. 
Against  ruin  from  these  causes  protection  is  im¬ 
possible.  The  maxim  referred  to  is  so  common¬ 
ly  acepted  that  courts  have  made  it  a  basis  for 
important  judgments;  and  it  is  not  to  be  won¬ 
dered  at,  therefore,  that  the  question  should  be 
made  whether  it  is  competent  to  erect  barriers 
to  free  competition  in  a  business  so  important 
to  the  public  as  that  which  is  carried  on  by  the 
railroads.” 

Greenhood  on  Public  Policy,  pp.  661,  662. 

The  public  is  entitled  to  all  the  rights  and  improved 
facilities  which  competition  will  yield. 

Public  policy  condemns  any  contract,  agreement  or 
understanding  between  railroads  which  infringes  this 
right  of  the  public. 

In  the  case  of  Hartford  &  New  Haven  R.  R.  Co.  vs. 
New  York  &  New  Haven  R.  R.  Co.,  3  Robbertson  1.  c.  415, 
it  was  said  by  the  court : 


79 


“It  is  conceded  by  both  parties  that  the  con¬ 
tract  of  March,  1850,  is  void,  as  being  opposed 
to  public  policy.  An  inspection  of  the  contract, 
satisfies  me  it  is  so.  It  is  a  compact  between 
the  parties,  intended  to  affect  the  facilities  for 
public  travel  over  a  route  of  railroad,  which  has 
been,  or  might  be,  authorized  by  law.  The  de¬ 
fendants  were  lessees  of  the  New  Haven  and 
Northampton  railroad,  then  in  part  constructed. 
The  lessors  had  covenanted  not  to  extend  the 
road  northerly  beyond  Granby  station  (a  point 
a  little  north  of  the  Connecticut  line),  without 
the  consent  of  the  defendants,  and  had  given 
over  to  the  defendants  all  the  franchises  and  cor¬ 
porate  powers  of  such  lessors,  for  the  purpose 
of  locating  or  constructing  any  railroad  or  ex¬ 
tension  of  any  railroad  northerly  from  Granby 
station.  By  the  agreement  with  the  plaintiffs 
of  March  16,  1850,  the  defendants  covenanted 
to  hold  the  franchises  and  corporate  powers 
conveyed  to  them  by  such  lease,  until  the  1st  of 
July,  1869,  and  during  such  time  not  to  extend 
such  railroad  north  of  Granby  station.  Such 
an  arrangement  was  intended  to  prevent  the  ex¬ 
tension  of  the  New  Haven  and  Northampton 
railroad,  to  any  point  north  of  its  terminus  at 
Granby;  and  to  prevent  any  competition  in 
travel,  detrimental  to  the  interests  of  the  plain¬ 
tiffs’  road,  which  had  a  monopoly  of  the  carry¬ 
ing  trade  from  Springfield  and  points  north  of 
Springfield  via  the  Northampton  and  Springfield 
road,  which  such  extension  might  afford.  The 
completion  of  the  New  Haven  and  Northampton 
railroad  to  Northampton,  would  open  a  new  line 


80 


for  travel  southward,  and  would  be  a  competitor 
and  rival  of  the  road  of  the  plaintiffs.  Such  com¬ 
petition  and  rivalry  it  was  not  lawful  for  these 
parties  to  prevent,  or  attempt  to  prevent;  and 
any  contract  to  effectuate  such  a  purpose  is  void. 
Public  policy  is  opposed  to  any  infringement  of 
the  rights  of  travel,  or  of  any  of  the  facilities 
which  competition  may  furnish;  and  the  law 
will  not  uphold  any  agreement  which  does  or 
may  injuriously  affect  such  rights  or  facilities.” 

In  Cleveland,  Columbus,  Cincinnati  &  Indianapolis 
Railway  Co.  vs.  Closser  et  al.,  126  Ind.  348,  the  petition 
alleged  that  the  defendant  railway  company  had  thereto¬ 
fore  entered  into  a  contract  with  other  competing  com¬ 
mon  carriers  for  the  establishment  and  maintenance  of 
freight  rates,  forming  what  was  known  as  a  pool,  the 
same  being  a  combination  for  the  purpose  of  preventing 
competition  in  the  transportation  of  freight.  The  peti¬ 
tion  also  alleged  that  while  said  contract  between  said 
competing  common  carriers  was  in  force,  complainant 
made  a  contract  with  the  defendant  railway  company, 
whereby  said  railway  company  agreed  to  transport  for 
complainant  between  certain  points  at  a  special  rate,  the 
complainant  stipulating,  however,  to  pay  a  greater  rate 
(the  rate  fixed  by  the  combination),  it  being  agreed  that 
complainant  should  be  entitled  to  a  certain  rebate  to  be 
repaid  promptly  to  complainant  after  its  shipments.  The 
defendant  railway  company  refused  to  repay  to  complain¬ 
ant  the  amount  to  which  he  was  entitled  in  the  way  of  a 
rebate  according  to  said  agreement,  and  this  action  was 
instituted  to  compel  such  payment.  The  case  hinged  on 
the  question  whether  the  arrangement  existing  between 
the  railroad  companies  to  fix  and  maintain  rates  was  legal. 


81 


In  this  case  the  Supreme  Court  of  Indiana  says : 

“ Coming  to  the  question  which  awaits  our 
judgment,  and  to  which  we  have  cleared  our 
path,  we  affirm  that  a  contract  between  corpora¬ 
tions  charged  with  a  public  duty ,  such  as  is  that 
of  common  carriers,  providing  for  the  formation 
of  a  combination  having  no  other  purpose  than 
that  of  stifling  competition,  and  providing  meams 
to  accomplish  that  object,  is  illegal.  The  pur¬ 
pose  to  break  down  competition  poisons  the 
whole  contract,  and  there  is  here  no  antidote 
which  will  rescue  it  from  legal  death.  The  ele¬ 
ment  which  destroys  the  contract  is  the  purpose 
to  stifle  competition,  for  a  combination  of  rival 
carriers ,  moved  and  controlled  by  that  purpose 
alone,  is  destructive  of  public  interest,  and,  to 
the  last  degree,  antagonistic  to  sound  public 
policy.  The  principle  on  which  this  rule  rests 
is  a  very  old  one,  and  its  place  in  the  law  is 
very  firm.  The  overshadowing  element  in  this 
case,  and  in  kindred  cases,  is  the  purpose  which 
influences  the  parties  in  uniting  themselves  in  a 
combination,  and  concerting  means  to  make  its 
purpose  effective,  for  the  law  abhors  a  combina¬ 
tion  which  has  for  its  principal  object  the  sup¬ 
pression  of  competition  in  matters  of  commerce 
in  which  the  public  have  an  interest.  Among 
the  early  cases  establishing  and  enforcing  the 
general  principle  which  now  occupies  our  atten¬ 
tion  are  those  wherein  it  is  held  that  an  agree¬ 
ment  to  prevent,  or  hinder,  competition  at  public 
sales  is  void.  For  illustrations,  although  there 
is  a  vast  number  of  cases,  we  need  not  look  be- 


15471—6 


82 


yond  our  own  reports.  Our  court  has  again  and 

>»  •- 

again  enforced  the  general  principle  we  have 
stated.  Hunter  vs.  Pfeiffer,  108  Ind.  197 ;  Board, 
etc.,  vs.  Verbarg,  63  Ind.  107 ;  Maguire  vs. 
Smock,  42  Ind.  1 ;  Gilbert  vs.  Carter,  10  Ind.  16 ; 
Forelander  vs.  Hicks,  6  Ind.  448;  Plaster  vs. 
Burger,  5  Ind.  232 ;  Bunts  vs.  Cole,  7  Blackf.  265. 

‘No  one/  said  the  Court,  in  Hunter  vs.  Pfeif¬ 
fer,  supra,  ‘can  predicate  an  enforceable  right 
upon  such  an  agreement/  In  support  of  this 
statement  the  court  cited  Atcheson  vs.  Mallon, 
43  N.  Y.  147  (3  Am.  Rep.  678)  ;  Woodworth  vs. 
Bennett,  43  N.  Y.  273  (3  Am.  Rep.  706)  ;  Gibbs 
vs.  Smith,  115  Mass.  592;  Hannah  vs.  Fife,  27 
Mich.  172.  Relevant  and  striking  illustrations 
of  the  scope  and  force  of  the  general  principle 
are  supplied  by  what  are  known  as  “The  Sugar 
Trust  Cases,”  decided  by  the  courts  of  New 
York — cases  rich  in  argument  and  authority. 
People  vs.  North  River  Sugar  Refining  Co.,  22 
Abbott  N.  Cases,  164;  see,  also,  Law  Literature 
of  Trust  Combinations,  etc.,  23  Abbott  N.  Cases, 
317 ;  People  vs.  North  River  Sugar  Refining  Co., 
121  N.  Y.  582.  The  authorities  collected  in  those 
cases  demonstrate  the  proposition  that  a  trust, 
or  combination,  having  for  its  purpose  the  sup¬ 
pression  of  free  competition,  cannot  live  where 
the  common  law  prevails.  There  are,  however, 
cases  which,  in  their  facts,  bear  a  closer  re¬ 
semblance  to  the  present  than  the  sugar  trust 
cases;  but,  after  all,  it  may  be  said  with  pro¬ 
priety  the  important  thing  to  be  secured  is  a 
sound  and  salutary  general  principle,  and  not 
merely  cases  with  closely  resembling  facts. 


83 


There  is  no  difficulty  in  securing  the  principle 
we  seek,  for  cases  almost  without  number  assert 
and  enforce  it  in  an  almost  endless  variety  of 
forms  and  phases. 

One  of  the  cases  near  akin  to  the  one  be¬ 
fore  us  is  that  of  Hooker  vs.  Vandewater,  4 
Denio  349.  In  that  case  competing  canal  com¬ 
panies  combined,  and  agreed  to  fix  an  estab¬ 
lished  rate  of  freight,  and  to  divide  profits. 
The  agreement  was  adjudged  illegal,  the  court 
saying,  among  other  things,  that  Tt  is  a  general 
proposition  that  an  agreement  to  do  an  unlawful 
act  cannot  be  supported  at  law — that  no  right 
of  action  can  spring  out  of  an  illegal  contract; 
and  this  rule  applied  not  only  when  the  contract 
is  expressly  illegal,  but  whenever  it  is  opposed 
to  public  policy/  Still  closer  is  the  resemblance 
between  this  case,  and  that  of  Texas,  etc.,  R.  W. 
Co.  vs.  Southern  Pacific  R.  W.  Co.,  41  La.  Ann. 
970.  The  court  there  held  a  'pooling  contract' 
substantially  the  same  as  the  one  described  in 
the  appellees'  complaint  to  be  void,  and  in  sup¬ 
port  of  its  ruling  referred  to  the  cases  of  Gibbs 
vs.  Consolidated  Gas  Co.,  130  U.  S.  396;  Wood- 
stock  Iron  Co.,  vs.  Richmond,  etc.,  Extension 
Co.,  129  U.  S.  643;  Morris  Run  Coal  Co.  vs. 
Barclay  Coal  Co.,  68  Pa.  St.  173;  Amot  vs.  Pitt- 
son,  etc.,  Coal  Co.,  68  N.  Y.  558 ;  Craft  vs.  Mc- 
Conoughy,  79  Ill.  346;  Morrill  vs.  Boston,  etc., 
Railroad,  55  N.  H.  531 ;  Jackson  vs.  McLean,  36 
Fed.  R.  213;  Santa  Clara  Valley,  etc.,  Co.  vs. 
Hayes,  18  Pacif.  Rep.  391 ;  Firemen's  Charitable 
Association  vs.  Berghaus,  13  La.  Ann.  209 ;  India 
Bagging  Association  vs.  Kock,  14  La.  Ann.  168 ; 


84 


Glasscock  vs.  Wells,  23  La.  Ann.  517,  and  Cum¬ 
mings  vs.  Saux,  30  La.  Ann.  207. 

The  authorities  found  on  every  hand  not 
only  fully  support  our  conclusion  that  a  contract 
between  competing  carriers,  forming  a  combina¬ 
tion  for  the  purpose  of  stifling  competition ,  is 
prima  facie  illegal ,  but  many  of  them  carry  the 
principle  to  a  much  greater  length” 

In  Anderson  vs.  Jett,  89  Ky.  375,  the  owners  of  two 
competing  boats  agreed,  in  order  to  stop  the  rivalry  in 
their  business,  to  pool  in  mixed  proportions  the  net  profits 
earned  by  each,  each  boat  bearing  its  own  expenses. 

In  discussing  this  contract,  the  Court  says : 

“And  another  feature  detrimental  to  the 
public  interest,  consisting  in  the  fact  that  they 
were  not  only  deprived  of  frequent  means  of 
shipments  and  passenger  travel,  but  subjected 
to  extortionate  charges. 

It  is  the  competition,  or  fear  of  competition, 
that  makes  these  carriers  efficient,  attentive,  po¬ 
lite  and  reasonable  in  charges ;  remove  the  com¬ 
petition,  or  the  fear  of  it,  and  they  become  ex¬ 
tortionate,  inattentive,  impolite  and  negligent. 
The  writing  sued  on  by  the  appellant  tended  to 
inspire  just  such  state  of  case.  It  is  said  that 
neither  was  bound  to  charge  the  same  as  the 
other.  That  is  true;  but  either  could  extort 
with  impunity,  and  the  other  would  be  an  equal 
recipient  of  the  fruit  of  the  extortion;  there 
would  be  no  motive  power — rivalry  in  trade — to 
circumvent  the  extortion ;  on  the  contrary,  self- 
interest  would  prompt  not  only  the  encourage¬ 
ment  of  the  extortion,  but  an  imitation  of  the 


85 


nefarious  example.  It  is  true  that  their  con¬ 
tract  did  not,  in  so  many  words,  bind  them  to 
any  given  charges ;  but  it  made  it  to  the  interest 
of  each,  not  only  to  charge,  but  to  encourage 
and  sustain  the  other  in  charges  that  would 
amount  to  confiscation. 

The  coal  merchant,  whose  only  means  of 
transportation  is  by  the  Kentucky  river,  may 
not  be  able,  if  compelled  to  pay  exorbitant 
freight  charges,  to  compete  with  his  rivals  in 
business  who  have  other  means  of  transporta¬ 
tion;  or  if  such  competition  should  not  exist, 
the  consumers  of  his  coal  would  be  taxed  with 
these  charges;  and,  more  pitiable  than  all  the 
rest,  would  be  the  condition  of  the  agriculturist, 
whose  only  means  of  transportation  would  be 
by  said  river.  Bivalry  is  the  life  of  trade;  the 
thrift  and  welfare  of  the  people  depend  upon  it ; 
monopoly  is  opposed  to  it  all  along  the  line; 
the  accumulation  of  wealth  out  of  the  brow 
sweat  of  honest  toilers  by  means  of  combina¬ 
tions  is  opposed  to  competing  trade  and  enter¬ 
prise.  That  public  policy  that  encourages  fair 
dealing,  honest  thrift  and  enterprise  among  all 
the  citizens  of  the  Commonwealth,  and  is  op¬ 
posed  to  monopolies  and  combinations  because 
unfriendly  to  such  fair  dealing,  thrift  and  en¬ 
terprise,  declares  all  combinations  whose  object 
is  to  destroy  or  impede  free  competition  between 
the  several  lines  of  business  engaged  in,  utterly 
void.  The  combination  or  agreement,  whether 
or  not  in  the  particular  instance  it  has  the  de¬ 
sired  effect,  is  void.  The  vice  is  in  the  combina¬ 
tion  or  agreement.  The  practical  evil  effect  of 


86 


the  combination  only  demonstrates  its  charac¬ 
ter;  but  if  its  object  is  to  prevent  or  impede 
free  and  fair  competition  in  trade,  and  may,  in 
fact,  have  that  tendency,  it  is  void  as  being 
against  public  policy.  For  the  foregoing  rea¬ 
sons,  the  agreement  is  against  public  policy,  and 
is,  therefore,  void. 

In  Stanton  vs.  Allen,  5  Denio  434,  49  Am.  Dec.  282, 
all  the  transportation  lines  on  the  Erie  &  Oswego  Canal 
formed  a  voluntary  association  for  the  purpose  of  estab¬ 
lishing  fair  and  uniform  rates  of  freight  and  equalizing 
the  business  among  the  members. 

To  this  end  the  members  agreed  upon  the  conver¬ 
sion  of  their  properties  into  shares  to  be  distributed 
among  themselves  in  certain  proportions  entitling  each 
to  an  income  from  the  entire  earnings  of  the  association 
in  accordance  with  the  proportion  of  shares  held  by  him. 
It  was  further  agreed  that  rates  were  to  be  determined  by 
a  committee,  and  were  to  extend  to  the  transportation 
of  freight  and  passengers.  Each  member  bound  himself 
to  run  all  the  boats  he  then  had  according  to  the  agree¬ 
ment,  and  to  turn  their  earnings  into  the  common  stock 
at  the  rates  agreed  upon,  and  at  which  he  was  to  be 
charged  in  the  final  distribution. 

Each  member  also  bound  himself  to  offer  to  his  as¬ 
sociates  such  freight  as  he  was  unable  to  carry,  and  if 
such  associates  did  not  take  same,  he  was  then  author¬ 
ized  to  procure  its  transportation  without  limitation  as 
to  rates,  and,  after  taking  out  the  freight  and  certain 
charges,  to  turn  in  the  balance  to  the  common  stock. 

In  an  action  upon  a  note  given  under  this  arrange¬ 
ment,  it  was  held : 

“The  association  was  formidable  and  impos¬ 
ing,  consisting  as  it  did  of  the  members  of  all 


87 


the  transportation  lines  on  the  Erie  and  Oswego 
canals  at  the  time.  Its  professed  object  and 
purpose  was  the  establishment  of  fair  and  uni¬ 
form  rates  of  freight,  and  to  equalize  the  busi¬ 
ness  among  the  members.  These  rates  were  to 
be  determined  by  a  committee,  and  to  extend  to 
the  transportation  of  both  freight  and  pasengers. 
While  the  introductory  terms  of  the  agree¬ 
ment  proposed  nothing  apparently  objectiona¬ 
ble,  the  ultimate  object  is  very  manifest  and  is 
of  a  different  character.  It  is  nothing  less  than 
the  attainment  of  an  exemption  of  the  standard 
of  freights  and  the  facilities  and  accommoda¬ 
tions  to  be  rendered  to  the  public  from  the 
wholesome  influence  of  rivalry  and  competi¬ 
tion.  *  *  * 

“As  these  canals  are  the  property  of  the 
state,  constructed  at  great  expense,  as  facilities 
to  trade  and  commerce,  and  to  foster  and  en¬ 
courage  agriculture,  and  are  at  the  same  time 
a  munificent  source  of  revenue,  whatever  con¬ 
cerns  their  employment  and  usefulness  deeply 
involves  the  interests  of  the  whole  state.  *  *  * 

“Though  the  branch  of  the  law  relating  to 
public  policy  is  liable  to  be  misunderstood  and 
extended  beyond  its  proper  dimensions,  still  it 
must  not  on  that  account  be  neglected  or  dis¬ 
paraged.  The  rule  that  contracts  and  agree¬ 
ments  are  void  when  contrary  to  public  policy, 
when  properly  understood  and  applied,  is  one 
of  the  great  preservative  principles  of  a 
state.  *  *  * 

“Finally,  I  conclude  that  the  association  in 
question  had  a  manifest  and  necessary  tendency 


88 


to  diminish  the  revenue  of  the  state,  impair  the 
utility  of  a  great  public  work  intimately  con¬ 
nected  with  the  interests  of  the  whole  people, 
and  that  it  must  be  eminently  injurious  to  trade. 
The  articles  of  association,  therefore,  in  our 
judgment,  unquestionably  contravene  public 
policy,  and  are  manifestly  injurious  to  the  in¬ 
terest  of  the  state.  Hence,  they  are  void  at  the 
common  law.  It  has  heretofore  been  decided 
by  this  court  that  an  association  among  carriers 
on  the  Erie  canal,  with  provisions  in  its  articles 
very  similar  to  the  present,  though  of  far  less 
extent,  was  a  conspiracy  to  commit  an  act  in¬ 
jurious  to  trade,  contrary  to  2  R.  S.,  691,  sec¬ 
tion  8,  and  was  therefore  utterly  void:  (Hooker 
vs.  Vandewater,  4  Denio  349,  47  Am.  Dec.  258.) 
That  decision  being  conclusive  on  the  main  point 
in  the  present  case,  I  might  have  rested  upon 
that  authority  alone,  if  I  had  not  supposed  that 
the  occasion  called  for  an  opinion  as  to  the 
legality  of  such  an  association  upon  the  prin¬ 
ciples  of  the  common  law” 

In  Hooker  et  al.  vs.  Vandewater,  4  Denio  349,  47  Am. 
Dec.  258,  five  of  the  most  important  owners  of  distinct 
and  independent  lines  of  boats  entered  into  an  arrange¬ 
ment  or  contract  to  establish  and  maintain  uniform  rates 
of  freight,  to  equalize  their  forwarding  business,  and  to 
avoid  all  unnecessary  expense  in  conducting  the  same  for 
a  limited  period. 

To  accomplish  these  purposes,  the  respective  lines 
were  converted  into  shares  of  stock,  each  party  being 
given  a  certain  proportion  in  the  earnings  of  all  the  lines, 
computed  upon  the  number  of  shares  of  stock  allotted 
to  him. 


f 


89 

The  statute  of  that  state  provided,  “if  two  or  more 
persons  shall  conspire  to  commit  any  act  injurious  to 
trade  or  commerce,  they  shall  be  deemed  guilty  of  a  mis¬ 
demeanor.”  This  statute  was  but  declaratory  of  the  com¬ 
mon  law,  and  in  applying  it  to  the  contract  above  re¬ 
ferred  to,  the  Court  says: 

“The  object  of  this  combination  was  ob¬ 
viously  to  destroy  competition  between  the  sev¬ 
eral  lines  in  the  business  engaged  in.  It  was 
a  conspiracy  between  the  individuals  contract¬ 
ing,  to  prevent  a  free  competition  among  them¬ 
selves  in  the  business  of  transporting  merchan¬ 
dise,  property  and  passengers  upon  the  public 
canals.  The  question  arises,  is  such  a  conspiracy 
to  commit  such  an  act  'injurious  to  trade  or 
commerce/  within  the  meaning  of  the  statute, 
and  therefore  illegal?  The  words  trade  and 
commerce  are  said  by  Jacobs,  in  his  law  dic¬ 
tionary,  not  to  be  synonymous;  that  commerce 
relates  to  dealings  with  foreign  nations;  trade, 
on  the  contrary,  means  mutual  traffic  among- 
ourselves,  or  the  buying,  selling  or  exchanging 
of  articles  between  members  of  the  same  com¬ 
munity.  That  the  raising  of  the  price  of 
freights  f6r  the  transportation  of  merchandise 
or  passengers  upon  our  canals  is  a  matter  of 
public  concern,  and  in  which  the  public  have  a 
deep  interest,  does  not  admit  of  doubt.  It  is  a 
familiar  maxim,  that  competition  is  the  life  of 
trade.  It  follows,  that  whatever  destroys, 
or  even  relaxes,  competition  in  trade,  is  injuri¬ 
ous,  if  not  fatal  to  it.  The  People  vs.  Fisher, 
14  Wend.  9  (28  Am.  Dec.  501).  The  object  of 
the  agreement  as  expressed  in  the  written  con- 


90 


tract,  was  plausible  enough ;  but  it  is  impossible 
to  conceal  the  real  intention.  It  is  evident  that 
the  parties  were  the  owners  of  five  separate  and 
powerful  lines  of  boats,  provided  for  the  trans¬ 
portation  of  property,  merchandise  and  passen¬ 
gers  on  the  canals,  then  in  use  and  in  active 
rivalry  in  the  business  affecting  more  or  less  the 
price  of  freights;  to  destroy  which  rivalry  and 
keep  up  the  price  to  certain  rates  fixed  by  them¬ 
selves,  was  the  great,  if  not  the  sole  object  of 
that  agreement.  The  transaction  amounted,  as 
I  think,  to  a  conspiracy  to  commit  an  act  in¬ 
jurious  to  trade,  within  the  legal  meaning  of  the 
statute  denouncing  it  as  a  crime,  and  was  there¬ 
fore  illegal  and  void.” 

In  Texas  &  Pacific  Ry.  Co.  et  al.  vs.  Southern  Pacific 
Ry.  Co.,  41  La.  Ann.  970,  one  party  owning  and  control¬ 
ling  a  system  of  six  railroads  and  another  party  as  owner 
and  in  control  of  a  railway  system  consisting  of  a  like 
number  of  railroads,  entered  into  an  original  agreement 
and  later  a  modified  agreement  on  behalf  of  the  railroad 
companies  represented  by  them,  respectively,  for  the  pur¬ 
pose  of  adjusting  certain  differences  then  existing  be¬ 
tween  their  companies,  and  to  put  an  end  to  certain  litiga¬ 
tion  arising  therefrom.  With  one  exception  the  systems 
of  railroads  thus  made  parties  to  the  agreement  were 
independent  and  competing.  The  agreement  entered  into 
contained  a  provision  pooling  the  earnings  of  such  rail¬ 
roads  in  certain  proportions.  In  an  action  against  some 
of  the  railroad  companies  based  exclusively  on  the  pool¬ 
ing  provision  of  the  agreement  to  recover  excesses  of 
earnings,  it  was  held  that: 

“It  cannot  be  doubted  that  shippers  who 
desired,  without  the  existence  of  the  agreement 


91 


contained  in  article  6,  to  consign  goods  either 
from  El  Paso  to  New  Orleans,  or  the  reverse, 
or  from  Galveston  to  El  Paso,  or  the  reverse, 
had  the  option  to  select  either  of  the  two  lines 
in  accordance  with  the  most  favorable  terms 
which  he  could  obtain  from  either.  He  would 
then  have  had  the  advantage  of  the  natural  com¬ 
petition  existing  between  the  two  rival  systems. 
But  under  the  effect  of  the  arrangement  now 
under  discussion,  the  shipper  could  derive  no 
advantage  as  a  result  of  his  choice  between  the 
two,  as  the  terms  would  be  the  same  with  either 
or  both. 

It  is,  therefore,  too  clear  for  further  argu¬ 
ment  or  illustration  that  the  first,  the  lasting 
and  the  inevitable  result  of  the  agreement  to 
the  public  was  to  stifle  competition,  and  as  com¬ 
petition  is  the  life  of  trade,  the  effect  of  the 
contract  must  necessarily  and  inevitably  have 
been  injurious  to  public  interests,  and  hence  it 
was  contrary  to  public  policy. 

We  have  been  at  great  pains,  and  have  de¬ 
voted  long  and  tedious  labor  to  examine  all  the 
authorities,  consisting  mainly  of  opinions  ren¬ 
dered  on  this  point  by  courts  of  last  resort  in 
this  country,  which  were  submitted  to  us  by 
counsel  in  this  case,  and  we  reach  the  conclusion 
that  American  jurisprudence  has  firmly  settled 
the  doctrine  that  all  contracts  which  have  a 
palpable  tendency  to  stifle  competition,  either  in 
the  market  value  of  commodities  or  in  the  car¬ 
riage  or  transportation  of  such  commodities,  are 
contrary  to  public  policy. 


92 


In  support  of  the  conclusions  thus  announced,  the 
court  quoted  approvingly  from  Hooker  vs.  Vande water, 
4  Denio  349 ;  Stanton  vs.  Allen,  5  Denio  434 ;  Salt  Co.  vs. 
Guthrie,  35  0.  666;  Gibbs  vs.  Baltimore,  130  U.  S.  408. 

In  People  vs.  Sheldon,  139  N.  Y.  251,  a  number  of 
retail  coal  dealers  associated  themselves  as  the  Lockport 
Coal  Exchange,  under  a  constitution  and  by-laws.  The 
objects  expressed  in  this  instrument  were  to  foster  trade 
and  commerce  in  coal,  wood  and  other  products  and  to 
protect  from  unjust  and  unlawful  exactions,  to  diffuse 
information  concerning  customers,  to  settle  differences, 
to  produce  uniformity  and  certainty  in  the  customs  and 
usages  of  the  trade,  and  to  establish  rules  and  regula¬ 
tions  which  might  be  proper  and  necessary  for  their 
mutual  co-operation,  interest  and  protection.  It  was  also 
agreed  that  the  price  of  coal  should,  as  far  as  practicable, 
be  kept  uniform,  and  that  the  same  should  not  be  more 
than  a  fair  and  reasonable  advance  over  the  wholesale 
rates. 

In  a  prosecution  for  conspiracy  based  on  said  con¬ 
tract,  the  court  said : 

“But  the  question  here  does  not,  we  think, 
turn  on  the  point  whether  the  agreement  be¬ 
tween  the  retail  dealers  in  coal  did,  as  a  matter 
of  fact,  result  in  injury  to  the  public  or  to  the 
community  in  Lockport.  The  question  is,  was 
the  agreement,  in  view  of  what  might  have  been 
done  under  it  and  the  fact  that  it  was  an  agree¬ 
ment  the  effect  of  which  was  to  prevent  com¬ 
petition  among  the  coal  dealers,  one  upon  which 
the  law  affixes  the  brand  of  condemnation.  It 
has  hitherto  been  an  accepted  maxim  in  political 
economy  that  'competition  is  the  life  of  trade/ 
The  courts  have  acted  upon  and  adopted  this 


93 


maxim  in  passing  upon  the  validity  of  agree¬ 
ments,  the  design  of  which  was  to  prevent  com¬ 
petition  in  trade,  and  have  held  such  agreements 
to  be  invalid.  It  is  to  be  noticed  that  the  organ¬ 
ization  of  the  “exchange”  was  of  the  most 
formal  character.  The  articles  bound  all  who 
became  members  to  conform  to  the  regulations. 
The  observance  of  such  regulations  by  the  mem¬ 
bers  was  enforced  by  penalties  and  forfeitures. 
A  member  accused  by  the  secretary  of  having 
violated  any  provision  of  the  constitution  or  by¬ 
laws  was  required  to  purge  himself  by  affidavit, 
although  evidence  to  sustain  the  charge  should 
be  lacking.  The  shippers  of  coal  were  to  be 
notified  in  case  of  persistent  default  by  the 
member,  that  ‘he  is  not  entitled  to  the  privileges 
of  membership  in  the  exchange/  No  member 
was  permitted  to  sell  coal  at  less  than  the  price 
fixed  by  the  exchange.  The  organization  was 
a  carefully  devised  scheme  to  prevent  competi¬ 
tion  in  the  price  of  coal  among  the  retail  deal¬ 
ers,  and  the  moral  and  material  power  of  the 
combination  afforded  a  reasonable  guaranty 
that  others  would  not  enage  in  the  business  in 
Lockport  except  in  conformity  with  the  rules 
of  the  exchange. 

The  cases  of  Hooker  vs.  Vandewater  (4  Den. 
349),  and  Stanton  vs.  Allen  (5  id.  434),  are,  we 
think,  decisive  authorities  in  support  of  the 
judgment  in  this  case.  They  were  cases  of 
combinations  between  transportation  lines  on 
the  canals,  to  maintain  rates  for  the  carriage  of 
goods  and  passengers,  and  the  court,  in  those 
cases,  held  that  the  agreements  were  void,  on 


94 


the  ground  that  they  were  agreements  to  pre¬ 
vent  competition,  and  the  doctrine  was  affirmed 
that  agreements  having  that  purpose,  made  be¬ 
tween  independent  lines  of  transportation,  were 
in  law,  agreements  injurious  to  trade.  In  those 
cases  it  was  not  shown  that  the  rates  fixed  were 
excessive.  In  the  case  in  5th  Denio,  the  judge 
delivering  the  opinion  referred  to  the  effect 
of  the  agreement  upon  the  public  revenue  from 
the  canals.  This  was  an  added  circumstance, 
tending  to  show  the  injury  which  might  result 
from  agreements  to  raise  prices  or  prevent  com¬ 
petition.  (See,  also,  People  vs.  Fisher,  14 
Wend.  10 ;  Arnot  vs.  P.  &  E.  Coal  Co.,  68  N.  Y. 
558.)  The  gravamen  of  the  offense  of  con¬ 
spiracy  is  the  combination.  Agreements  to  pre¬ 
vent  competition  in  trade  are  in  contemplation 
of  law  injurious  to  trade ,  because  they  are  liable 
to  be  injuriously  used.  The  present  case  may 
be  used  as  an  illustration.  The  price  of  coal 
now  fixed  by  the  exchange  may  be  reasonable  in 
view  of  the  interests  both  of  dealers  and  con¬ 
sumers,  but  the  organization  may  not  always 
be  guided  by  the  principle  of  absolute  justice. 
There  are  some  limitations  in  the  constitution 
of  the  exchange,  but  these  may  be  changed  and 
the  price  of  coal  may  be  unreasonably  advanced. 
It  is  manifest  that  the  exchange  is  acting  in 
sympathy  with  the  producers  and  shippers  of 
coal.  Some  of  these  shippers  were  present  when 
the  plan  of  organization  was  considered,  and  it 
was  indicated  on  the  trial  that  the  producers 
had  a  similar  organization  between  themselves. 
If  agreements  and  combinations  to  prevent  com - 


95 


'petition  in  prices  are  or  may  be  hurtful  to  trade, 
the  only  sure  remedy  is  to  prohibit  all  agree¬ 
ments  of  that  character.  If  the  validity  of  such 
an  agreement  was  made  to  depend  upon  actual 
proof  of  public  prejudice  or  injury,  it  would  be 
very  difficult  in  any  case  to  establish  the  in¬ 
validity,  although  the  moral  evidence  might  be 
very  convincing.  We  are  of  opinion  that  the 
principal  upon  which  the  case  was  submitted  to 
the  jury,  is  sanctioned  by  the  decisions  in  this 
state,  and  that  the  jury  were  properly  instructed 
that  if  the  purpose  of  the  agreement  was  to 
prevent  competition  in  the  price  of  coal  be¬ 
tween  the  retail  dealers,  it  was  illegal  and  justi¬ 
fied  the  conviction  of  the  defendants.” 

It  is  true  that  this  prosecution  was  based  upon  a 
statute,  but  that  statute  was  nothing  more  than  declara¬ 
tory  of  the  common  law,  its  provisions  being  “If  two  or 
more  persons  conspire  to  commit  any  act  injurious  to 
trade  or  commerce  they  shall  be  guilty  of  a  misde¬ 
meanor.” 

In  State  ex  rel.  vs.  Armour  Packing  Company,  173 
Mo.  1.  c.  388,  this  court  quoted  at  length  from  the  cases, 
supra ,  People  vs.  Sheldon,  Hooker  vs.  Vandewater  and 
Stanton  vs.  Allen,  and  approved  the  principles  therein 
announced. 

In  Chicago,  etc.,  Ry.  Co.  vs.  Southern  Ind.  Ry.  Co., 
38  Ind.  App.  1.  c.  238,  the  court  had  under  consideration 
a  contract  between  two  railroad  companies  whereby  one 
agreed,  for  certain  considerations,  not  to  serve  quarries 
the  output  of  which  the  other  was  transporting. 

After  declaring  this  to  be  “a  stipulation,  the  effect 
of  which  is  to  deprive  the  shipper  of  the  benefits  of  com¬ 
petition,  should  he  demand  that  the  second  party  dis- 


I 


96 

charge  its  public  duty  by  furnishing  transportation  facili¬ 
ties  to  him,”  the  court  said: 

“The  policy  of  the  law  is  to  prevent  the 
creation  of  monopolies  and  to  foster  fair  com¬ 
petition.  Eel  River  R.  Co.  vs.  State  ex  rel. 
(1900),  155  Ind.  433;  Indianapolis  Union  R.  Co. 
vs.  Dohn  (1899),  153  Ind.  10,  45  L.  R.  A.  427, 
74  Am.  St.  274;  State  ex  rel.  vs.  Portland  Nat. 
Gas  Co.  (1899),  153  Ind.  483,  53  L.  R.  A.  413, 
74  Am.  St.  314 ;  Board,  etc.  vs.  Lafayette,  etc.,  R. 
Co.  (1875),  50  Ind.  85;  2  Elliott,  Railroads,  pr. 
359. 

'A  contract  between  corporations  charged 
with  a  public  duty,  such  as  that  of  common  car¬ 
riers,  providing  for  the  formation  of  a  combina¬ 
tion  having  no  other  purpose  than  that  of  sti¬ 
fling  competition,  and  providing  means  to  ac¬ 
complish  that  object,  is  illegal.  The  purpose  to 
break  down  competition  poisons  the  whole  con¬ 
tract,  and  there  is  here  no  antidote  which  will 
rescue  it  from  legal  death/  Cleveland,  etc., 
R.  Co.  vs.  Closser  (1890)  ;  126  Ind.  348,  361, 
9  L.  R.  A.,  754,  22  Am.  St.  593.  The  important 
thing  to  be  secured  was,  the  court  declared  in 
the  case  above  cited,  a  sound  and  salutary  gen¬ 
eral  principle,  and  not  merely  cases  with  closely 
resembling  facts.  The  principle  declared,  as 
heretofore  quoted,  accords  with  the  necessities 
of  commerce  and  development,  and  is  supported 
by  a  vast  volume  of  authority,  including  the  fol¬ 
lowing:  Louisville,  etc.,  R.  Co.  vs.  Sumner 
(1886)  106  Ind.  55,  59,  55  Am.  Rep.  719;  St. 
Louis,  etc.,  R.  Co.  vs.  Mathers  (1874),  71  Ill., 
592,  22  Am.  Rep.  122 ;  Greenhood,  Public  Policy, 


i 


97 


p.  626;  Kettle  River  R.  Co.  vs.  Eastern  R.  Co. 
(1889),  41  Minn.  461,  43  N.  W.  469,  6  L.  R.  A. 
Ill ;  W.  Va.  Trans.  Co.  vs.  Ohio  River,  etc.,  Co. 
(1883),  22  W.  Va.  600,  626,  46  Am.  Rep.  527. 

It  is  contended  in  argument  that  it  was 
,  competent  to  make  the  contract  in  question,  in 

order  to  prevent  destructive  competition.  There 
is  no  basis  of  fact  justifying  the  proposition.  A 
combination  between  common  carriers  to  pre¬ 
vent  competition  is  prima  facie  illegal.  ‘The 
burden  is  on  the  carrier  to  remove  the  presump¬ 
tion,  and  until  it  is  removed  the  agreement  goes 
down  before  the  presumption,  and  the  agreement 
must  be  held  to  be  within  the  condemnation 
directed  against  all  contracts  which  violate 
public  policy/ 

That  the  restriction  of  competition  by  agreement 
among  carriers  is  violative  of  the  common  law,  is  again 
declared  in  the  case  of  E.  T.  V.  &  G.  Ry.  vs.  Int.  Com. 
ConTn,  39  C.  C.  A.  1.  c.  422-423,  in  which  case  the  circuit 
court  of  appeals,  said : 

“The  interstate  commerce  law,  it  is  conced¬ 
ed,  was  intended  to  encourage  normal  competi¬ 
tion.  It  forbids  pooling  for  the  very  purpose  of 
allowing  competition  to  have  effect.  But  it  is 
not  in  accord  with  its  spirit  or  letter  to  recog¬ 
nize,  as  a  condition  justifying  discrimination 
against  one  locality,  competition  at  a  more  dis¬ 
tant  locality,  when  competition  at  the  nearer 
point  is  stifled  or  reduced,  not  by  normal  re¬ 
strictions  but  by  agreement  between  those  who 
otherwise  would  be  competing  carriers.  The 
difference  in  conditions  thus  produced  is  ef- 


15471—7 


98 


fected  by  a  restraint  upon  trade  and  commerce 
which  is  not  only  violative  of  the  common  law, 
but  of  the  so  called  federal  anti-trust  act.” 

In  Pratt  vs.  Tapley,  3  Pugsley  (N.  B.)  171,  the  court 
condemned  a  contract  among  sixteen  tug  owners  of  the 
port  of  St.  Johns,  whereby  the  parties  thereto  bound 
themselves  to  a  uniform  rate  of  tonnage  (page  164)  (3) 
and  to  tow  arriving  vessels  in  regular  “turn,”  any  tug 
towing  out  of  “turn”  to  pay  over  the  towage  and  deliver 
the  vessel  to  the  tug  whose  “turn”  it  happened  to  be 
under  the  agreement. 

In  the  course  of  the  opinion  it  was  said: 

“Can  it  be  said  that  this  combination  does 
not  directly  and  immediately  interfere  with  the 
free  course  of  trade  and  navigation  at  the  port 
of  St,  John?  In  view  of  its  population  and  the 
extent  of  its  commerce,  the  number  of  tugboats 
controlled  by  this  combination  must  obviously 
embrace  the  great,  if  not  the  whole,  body  of 
tug  owners,  who  thus  bind  themselves  to  carry 
on  the  towing  business  in  accordance  with  the 
provisions  of  the  agreement  till  death  or  change 
of  ownership,  or  until  the  agreement  is  revoked 
by  a  majority  of  the  parties.  And  the  manner 
in  which  this  is  to  be  done  is  such  that  the  own¬ 
ers  or  masters  of  vessels  to  be  towed  can  have 
no  voice  in  the  selection  of  the  tug  to  be  em¬ 
ployed  or  the  price  to  be  paid  or  in  any  matter 
connected  with  the  towing;  and  the  ship-owner 
is  not  only  debarred  from  having  a  voice  in  the 
contract,  but  there  is  taken  from  the  inividual 
tug  owner  (except  subject  to  the  forfeiture  or 
penalty  involved  in  an  infraction  of  the  agree- 


99 


ment)  all  freedom  of  action  to  tow  or  not  to  tow, 
and  on  such  terms  as  may  be  for  his  interest  or 
the  interest  of  the  public  *  * 

And  the  court  held  the  agreement  to  be 

“ Unreasonable,  against  the  public  interests, 
in  restraint  of  trade,  and  a  violation  of  public 
policy.”  (Page  173.) 

In  discussing  a  contract  between  a  railroad  company 
and  express  company,  whereby  the  latter  was  granted  by 
the  former  the  exclusive  right  to  do  an  express  business 
on  such  railroad,  the  Supreme  Court  of  Pennsylvania,  in 
Sanford  vs.  R.  R.  Co.,  24  Pa.  St.  1.  c.  382,  said  that : 

“Competition  is  the  best  protection  to  the 
public,  and  it  is  against  the  policy  of  the  law 
to  destroy  it  by  creating  a  monopoly  of  any 
branch  of  business.”  The  contract  was  held  void 
as  against  public  policy. 

This  court,  in  Cravens  vs.  Rodgers,  101  Mo.  247,  held 
that  an  agreement  upon  the  part  of  a  railroad  company 
to  give  to  the  owner  of  an  omnibus  line  the  exclusive 
use  of  an  approach  to  the  railroad  platform  was  against 
public  policy,  and  in  the  course  of  the  opinion,  said: 

“The  business  of  both  parties  is  that  of  com¬ 
mon  carriers  for  hire,  on  the  same  line,  and  by 
their  connection  with  the  railroad  forming  one 
continuous  line,  by  which  passengers  are  trans¬ 
ported  to  the  same  general  destination,  the  rail¬ 
road  company  carrying  them  to  its  station  near 
the  city,  and  plaintiffs  and  defendants  carry¬ 
ing  them  to  their  several  destinations  in  the 
city.  As  common  carriers  it  is  the  duty  of  each 


100 


of  the  parties  to  transport  all  persons  who  offer 
to  take  and  pay  for  passage  with  them,  and 
they  are  charged  with  grave  and  responsible 
duties  to  such  persons  when  they  have  once 
taken  passage.  They  must  make  the  trip  whether 
they  have  one  or  many  passengers.  As  a 
corollary  of  this  duty  to  carry  all,  there  ought 
to  be  a  corresponding  right  upon  the  part  of 
each  to  have  the  same  facilities  afforded  them 
to  obtain  the  passage  in  their  respective  vehicles 
of  all  such  passengers  as  are  brought  to  the 
point  of  connection  by  the  connecting  carrier, 
the  railroad  company,  on  the  same  general  route. 
In  this  way  the  enterprise  of  each  is  encouraged , 
competition  is  stimulated ,  the  price  of  trans¬ 
portation  is  kept  within  reasonable  bounds;  the 
safest,  best  and  most  comfortable  means  of  con¬ 
veyance,  a  rapid  passage  and  polite  and  agree¬ 
able  service  are  apt  to  be  secured  to  the  travel¬ 
ing  public. 

On  the  other  hand,  if  better  facilities  are 
afforded  to  one  carrier  than  another  by  the  con¬ 
necting  carrier,  competition  is  discouraged,  a 
monopoly  created,  and  the  traveling  public  are 
apt  to  receive  a  slow,  uncomfortable,  slovenly, 
negligent  and  expensive  service.  Monopolies 
are  obnoxious  to  the  spirit  of  our  laws,  and  ought 
to  be  discouraged.  This  is  the  spirit  of  our  con¬ 
stitutional  provision  which  prohibits  ‘discrimina¬ 
tion  in  charges,  or  facilities  in  transportation 
*  *  *  between  transportation  companies 

and  individuals  or  in  favor  of  either.’  ” 

In  the  case  of  Clemons  vs.  Meadows,  29  Ky.  Law 
Reporter,  619,  the  question  involved  was  the  legality  of  a 


V 


101 


contract  between  proprietors  of  rival  hotels  whereby  one 
attempted  to  obligate  himself,  for  a  fixed  sum  per  month 
payable  by  the  other,  to  close  his  hotel  and  withdraw 
from  the  business  for  a  period  of  three  years. 

After  indicating  that,  under  the  laws  of  Kentucky, 
hotels  were  “quasi-public  institutions,”  the  court  held 
the  agreement  void.  Judge  Paynter,  in  delivering  the 
decision,  using  the  following  language  in  conclusion : 

“The  contract  was  not  for  the  purpose  of 
protecting  the  appellants  in  the  legitimate  use 
of  something,  which  they  acquired  by  it,  for 
nothing  was  conveyed  to  them.  The  purpose 
and  effect  of  the  contract  was  to  enable  the  ap¬ 
pellants  to  enjoy  an  illegitimate  use  of  some¬ 
thing  which  they  already  had.  Our  conclusion 
is,  that  the  contract  is  against  public  policy,  and 
the  demurrer  to  the  answer  should  have  been 
overruled.  (Chapman  vs.  Brown,  32  Am.  St. 
Report  297 ;  Clark  vs.  Neeham,  51  L.  R.  A. 
785;  Tuscaloosa  Ice  Mfg.  Co.  vs.  Williams,  85 
Am.  St.  Rep.  125;  Anderson  vs.  Jett,  89,  Ky. 
375). 

In  Anderson  vs.  Jett,  89  Ky.  375,  this  court 
well  said:  ‘Rivalry  is  the  life  of  trade;  the 
thrift  and  welfare  of  the  people  depend  upon  it ; 
monopoly  is  opposed  to  it  all  along  the  line ;  the 
accumulation  of  wealth  out  of  the  brow  sweat 
of  honest  toilers,  by  means  of  combinations,  is 
opposed  to  competing  trade  and  enterprise.  That 
public  policy  that  encourages  fair  dealing,  hon¬ 
est  thrift  and  enterprise  among  all  the  citizens  of 
,  the  Commonwealth,  and  is  opposed  to  mon¬ 
opolies  and  combinations  because  unfair  to  fair 
dealing,  thrift  and  enterprise,  declares  all  com- 


102 


binations  whose  object  is  to  destroy  or  impede 
free  competition  between  the  several  lines  of 
business  engaged  in,  utterly  void.  The  combi¬ 
nation  or  agreement,  whether  or  not  in  the 
particular  instance  it  has  the  desired  effect,  is 
void.  The  vice  is  in  the  combination  or  agree¬ 
ment.  The  practical  evil  effect  of  the  combina¬ 
tion  only  demonstrates  its  character;  but  if  its 
object  is  to  prevent  or  impede  free  and  fair 
competition  in  trade,  and  may,  in  fact  have  that 
tendency,  is  void  as  being  against  public  policy.” 

The  Federal  Anti-Trust  Act  passed  by  Congress  in 
1890,  provided: 

“Every  contract,  combination  in  the  form 
of  trust,  or  otherwise,  or  conspiracy  in  restraint 
of  trade  or  commerce  among  the  several  states, 
or  with  foreign  nations,  is  hereby  declared  to  be 
illegal.” 

It  is  apparent  from  the  authorities  heretofore  cited 
that  this  act,  in  so  far  as  it  applies  to  public  service  cor¬ 
porations,  is  nothing  more  than  declaratory  of  the  com¬ 
mon  law  which  prevails  in  the  several  states. 

The  sole  effect  of  this  act,  in  its  application  to  public 
service  corporations,  is  to  make  what  was,  and  yet  is,  the 
common  law  of  the  states,  the  statutory  law  of  the  nation 
in  matters  of  interestate  commerce. 

In  Dueber  Mfg.  Co.  vs.  Watch  and  Clock  Co.,  14 
C.  C.  A.  1.  c.  20,  66  Fed.  637,  Judge  Laeombe  said : 

“The  phrase  used  in  the  act  of  1890,  viz.: 
‘restraint  of  trade/  is  no  new  one.  It  had  there¬ 
tofore  been  used  by  courts  applying  the  doc¬ 
trines  of  the  common  law  in  determining  the  va- 


103 


lidity  of  contracts.  It  is  to  be  presumed  that  the 
lawmakers,  when  they  chose  this  phrase,  intend¬ 
ed  that  it  should  have,  when  used  in  the  statute, 
no  other  or  different  meaning  from  that  which 
had  always  been  given  to  it  in  judicial  decisions 
and  in  the  common  understanding.,, 

In  United  States  vs.  Trans-Missouri  Freight  Associ¬ 
ation,  et  al,  166  U.  S.  290,  eighteen  competing  railway 
companies  entered  into  an  association  whose  affairs  were 
managed  by  a  board  consisting  of  representatives  from 
each  of  the  railway  companies.  By  agreement,  power 
was  conferred  on  the  association  to  establish  and  maintain 
rules,  regulations  and  rates  on  all  competitive  traffic, 
through  and  local,  and  to  punish  by  fine  all  members  who 
failed  to  live  up  to  the  established  schedule. 

In  an  action  instituted  by  the  government  against  the 
association  and  its  members  for  the  purpose  of  having 
the  contract  declared  illegal,  the  association  dissolved  and 
the  members  prohibited  from  further  agreeing  and  acting 
together  in  the  maintenance  of  rates,  the  United  States 
Supreme  Court  held  that  a  contract  between  competing 
common  carriers  which  effects  traffic  rates  for  the  inter¬ 
state  transportation  of  persons  and  property,  was  within 
the  Federal  Anti-Trust  Law,  and  that  all  agreements  and 
combinations  in  restraint  of  trade  or  commerce,  whether 
reasonable  or  unreasonable,  were  illegal,  and  that  an 
agreement  between  railroads  to  fix  and  maintain  rates 
was  in  such  restraint  of  trade  and  commerce. 

In  discussing  this  agreement,  and  the  application  of 
the  Anti-trust  Act  to  it,  the  United  States  Supreme  Court 
said: 

“The  bill  shows  here  an  agreement  entered 
into  (as  stated  in  the  agreement  itself)  for  the 


104 


purpose  of  maintaining  reasonable  rates  to  be 
received  by  each  company  executing  the  agree¬ 
ment.”  *  *  * 

“Coming  to  the  merits  of  the  suit,  there 
are  two  important  questions  which  demand  our 
examination.  They  are,  first,  whether  the 
above-cited  act  of  Congress  (called  herein  the 
Trust  Act)  applies  to  and  covers  common  car¬ 
riers  by  railroad;  and,  if  so,  second,  does  the 
agreement  set  forth  in  the  bill  violate  any  pro¬ 
vision  of  that  act? 

As  to  the  first  question : 

The  language  of  the  act  includes  every  con¬ 
tract,  combination  in  the  form  of  trust  or  other¬ 
wise,  or  conspiracy,  in  restraint  of  trade  or  com¬ 
merce  among  the  several  states  or  with  foreign 
nations.  So  far  as  the  very  terms  of  the  stat¬ 
ute  go,  they  apply  to  any  contract  of  the  nature 
described.  A  contract,  therefore,  that  is  in  re¬ 
straint  of  trade  or  commerce  is  by  the  strict 
language  of  the  act  prohibited  even  though  such 
contract  is  entered  into  between  competing  com¬ 
mon  carriers  by  railroad,  and  only  for  the  pur¬ 
pose  of  thereby  affecting  traffic  rates  for  the 
transportation  of  persons  and  property.  It 
such  an  agreement  restrain  trade  or  commerce, 
it  is  prohibited  by  the  statute,  unless  it  can  be 
said  that  an  agreement,  no  matter  what  its 
terms,  relating  only  to  transportation  cannot 
restrain  trade  or  commerce.  We  see  no  escape 
from  the  conclusion  that  if  any  agreement  of 
such  a  nature  does  restrain  it,  the  agreement  is 
condemned  by  this  act.  It  cannot  be  denied 


105 


that  those  who  are  engaged  in  the  transporta¬ 
tion  of  persons  or  property  from  one  State  to 
another  are  engaged  in  interstate  commerce,  and 
it  would  seem  to  follow  that  if  such  persons 
enter  into  agreements  between  themselves  in  re¬ 
gard  to  the  compensation  to  be  secured  from 
the  owners  of  the  articles  transported,  such 
agreement  would  at  least  relate  to  the  business 
of  commerce,  and  might  more  or  less  restrain 
it.  The  point  urged  on  the  defendants'  part 
is  that  the  statute  was  not  really  intended  to 
reach  that  kind  of  an  agreement  relating  only 
to  traffic  rates  entered  into  by  competing  com¬ 
mon  carriers  by  railroad;  that  it  was  intended 
to  reach  only  those  who  were  engaged  in  the 
manufacture  or  sale  of  articles  of  commerce,  and 
who  by  means  of  trusts,  combinations  and  con¬ 
spiracies  were  engaged  in  affecting  the  supply 
or  the  price  or  the  place  of  manufacture  of  such 
articles.  The  terms  of  the  act  do  not  bear  out 
such  construction.  Railroad  companies  are  in¬ 
struments  of  commerce,  and  their  business  is 
commerce  itself.  State  Freight  Tax  case,  15 
Wall.  232,  275;  Telegraph  Co.  vs.  Texas,  105  U. 
S.  460,  464.  An  act  which  prohibits  the  making 
of  every  contract,  etc.,  in  restraint  of  trade  or 
commerce  among  the  several  States,  would  seem 
to  cover  by  such  language  a  contract  between 
competing  railroads,  and  relating  to  traffic 
rates  for  the  transportation  of  articles  of  com¬ 
merce  between  the  States,  provided  such  con¬ 
tract  by  its  direct  effect  produces  a  restraint 
of  trade  or  commerce.  What  amounts  to  a  re¬ 
straint  within  the  meaning  of  the  act  if  thus 
construed  need  not  now  be  discussed."  *  *  * 


/ 


106 


“It  is  said  that  Congress  had  very  different 
matters  in  view  and  very  different  objects  to 
accomplish  in  the  passage  of  the  act  in  question ; 
that  a  number  of  combinations  in  the  form  of 
trusts  and  conspiracies  in  restraint  of  trade 
were  to  be  found  throughout  the  country,  and 
that  it  was  impossible  for  the  state  governments 
to  successfully  cope  with  them  because  of  their 
commercial  character  and  of  their  business  ex¬ 
tension  through  the  different  states  of  the 
Union.  Among  these  trusts  it  was  said  in  Con¬ 
gress  were  the  Beef  Trust,  the  Standard  Oil 
Trust,  the  Steel  Trust,  the  Barbed  Fence  Wire 
Trust,  the  Sugar  Trust,  the  Cordage  Trust,  the 
Cotton  Seed  Oil  Trust,  the  Whiskey  Trust  and 
many  others,  and  these  trusts  it  was  stated,  had 
assumed  an  importance,  and  had  acquired  a 
power  which  were  dangerous  to  the  whole  coun¬ 
try,  and  that  their  existence  was  directly  antago¬ 
nistic  to  its  peace  and  prosperity.  To  combina¬ 
tions  and  conspiracies  of  this  kind  it  is  contend¬ 
ed  that  the  act  in  question  was  directed,  and 
not  to  the  combinations  of  competing  railroads 
to  keep  up  their  prices  to  a  reasonable  sum  for 
the  transportation  of  persons  and  property.  It 
is  true  that  many  and  various  trusts  were  in 
existence  at  the  time  of  the  passage  of  the  act, 
and  it  was  probably  sought  to  cover  them  by  the 
provisions  of  the  act.  Many  of  them  had  rend¬ 
ered  themselves  offensive  by  the  manner  in 
which  they  exercised  the  great  power  that  com¬ 
bined  capital  gave  them.  But  a  further  investi¬ 
gation  of  “the  history  of  the  times”  shows  also 
that  those  trusts  were  not  the  only  associations 
controlling  a  great  combination  of  capital  which 


107 


had  caused  complaint  at  the  manner  in  which 
their  business  was  conducted.  There  were  many 
and  loud  complaints  from  some  portions  of  the 
public  regarding  the  railroads  and  the  prices 
they  were  charging  for  the  service  they  rend¬ 
ered,  and  it  was  alleged  that  the  prices  for  the 
transportation  of  persons  and  articles  of  com¬ 
merce  were  unduly  and  improperly  enhanced  by 
combinations  among  the  different  roads. 
Whether  these  complaints  were  well  or  ill  found¬ 
ed,  we  do  not  presume  at  this  time  and  under 
these  circumstances  to  determine  or  to  discuss. 
It  is  simply  for  the  purpose  of  answering  the 
statement  that  it  was  only  to  trusts  of  the 
nature  above  set  forth  that  this  legislation  was 
directed,  that  the  subject  of  the  opinions  of  the 
people  in  regard  to  the  actions  of  the  railroad 
companies  in  this  particular  is  referred  to.  *  *  * 
“Many  of  the  foregoing  assertions  (refer¬ 
ring  to  reasons  assigned  by  companies  why  the 
law  should  not  include  them) ,  may  be  well  found¬ 
ed,  while  at  the  same  time  the  correctness  of  the 
conclusions  sought  to  be  drawn  therefrom  need 
not  be  conceded.  The  points  of  difference  be¬ 
tween  the  railroad  and  other  corporations  are 
many  and  great.  It  cannot  be  disputed  that  a 
railroad  is  a  public  corporation,  and  its  busi¬ 
ness  pertains  to  and  greatly  affects  the  public, 
and  that  it  is  of  a  public  nature.  The  company 
may  not  charge  unreasonable  prices  for  trans- 
poration,  nor  can  it  make  unjust  discrimina¬ 
tion,  nor  select  its  patrons,  nor  go  out  of 
business  when  it  chooses,  while  a  mere  trading 
or  manufacturing  company  may  do  ail  these 
things.  But  the  very  fact  of  the  public  char- 


108 


acter  of  a  railroad  would  itself  seem  to  call  for 
special  care  by  the  legislature  in  regard  to  its 
conduct,  so  that  its  business  should  be  carried 
on  with  as  much  reference  to  the  proper  and 
fair  interests  of  the  public  as  possible.  While 
the  points  of  difference  just  mentioned  and 
others  do  exist  between  the  two  classes  of  cor¬ 
porations,  it  must  be  remembered  they  have  also 
some  points  of  resemblance.  Trading,  manu¬ 
facturing  and  railroad  corporations  are  all  en¬ 
gaged  in  the  transaction  of  business  with  regard 
to  articles  of  trade  and  commerce,  each  in  its 
special  sphere,  either  in  manufacturing  or  trad¬ 
ing  in  commodities  or  in  their  transportation 
by  rail.  A  contract  among  those  engaged  in  the 
latter  business  by  which  the  prices  for  the  trans¬ 
portation  of  commodities  traded  in  or  manu¬ 
factured  by  the  others  is  greatly  enhanced  from 
what  it  otherwise  would  be  if  free  competition 
were  the  rule,  affects  and  to  a  certain  extent 
restricts  trade  and  commerce,  and  affects  the 
price  of  the  commodity.  Of  this  there  can  be  no 
question.  Manufacturing  or  trading  companies 
may  also  affect  prices  by  joining  together 
in  forming  a  trust  or  other  combination,  and  by 
making  agreements  in  restraint  of  trade  and 
commerce,  which  when  carried  out  affect  the 
interests  of  the  public.  Why  should  not  a  rail¬ 
road  company  be  included  in  general  legislation 
aimed  at  the  prevention  of  that  kind  of  agree¬ 
ment  made  in  restraint  of  trade,  which  may 
exist  in  all  companies,  which  is  substantially  of 
the  same  nature  wherever  found,  and  which 
tends  very  much  towards  the  same  results, 
whether  put  in  practice  by  a  trading  and  manu- 


109 


facturing  or  by  a  railroad  company?  It  is  true 
the  results  of  trusts,  or  combinations  of  that 
nature,  may  be  different  in  different  kinds  of 
corporations,  and  yet  they  all  have  an  essential 
similiarity,  and  have  been  induced  by  motives 
of  individual  or  corporate  aggrandizement  as 
against  the  public  interest.”  *  *  * 

‘‘Neither  is  the  statute,  in  our  judgment, 
so  uncertain  in  its  meaning,  or  its  language  so 
vague,  that  it  ought  not  to  be  held  applicable  to 
railroads.  It  prohibits  contracts,  combinations, 
etc.,  in  restraint  of  trade  or  commerce.  Trans¬ 
porting  commodities  is  commerce,  and  if  from 
one  State  to  or  through  another  it  is  interstate 
commerce.  To  be  reached  by  the  Federal  stat¬ 
ute  it  must  be  commerce  among  the  several 
States  or  with  foreign  nations.  When  the  act 
prohibits  contracts  in  restraint  of  trade  or  com¬ 
merce,  the  plain  meaning  of  the  language  used 
includes  contracts  which  relate  to  either  or  both 
subjects.  Both  trade  and  commerce  or  in¬ 
cluded  so  long  as  each  relates  to  that  which  is 
interstate  or  foreign.  Transportation  of  com¬ 
modities  among  the  several  states  or  with 
foreign  nations  falls  within  the  description  of 
the  words  of  the  statute  with  regard  to  that 
subject,  and  there  is  also  included  in  that  lan¬ 
guage  that  kind  of  trade  in  commodities  among 
the  states  or  with  foreign  nations  which  is  not 
confined  to  their  mere  transportation.  It  in¬ 
cludes  their  purchase  and  sale.”  *  *  * 


Under  the  name  of  Joint  Traffic  Association,  a  ma¬ 
jority  of  the  railroad  companies,  engaged  in  the  trans¬ 
portation  of  persons  and  property  between  Chicago  and 


110 


the  Atlantic  coast,  entered  into  an  agreement  whereby  it 
was  stipulated  that  reasonable  schedules  of  rates,  fares 
and  charges  were  to  be  established  and  thereafter  ad¬ 
hered  to  by  each  member,  subject  to  such  reasonable  and 
fair  changes  as  might  thereafter  be  made  by  the  different 
boards,  and  that  no  railroad  should  deviate  from  such 
rates  until  it  first  gave  notice  of  the  change  to  the  As¬ 
sociation. 

In  a  bill  by  the  government,  it  was  charged  that  the 
agreement  was  made  to  prevent  competition,  and  that  it 
unlawfully  restrained  trade  and  commerce  in  the  several 
states  and  territories.  On  final  hearing  the  United 
States  Supreme  Court  held  that  the  combination,  having 
been  entered  into  for  the  purpose  of  establishing  and 
maintaining  interstate  rates  and  fares  for  the  transpor¬ 
tation  of  freight  and  passengers,  was  within  the  prohibi¬ 
tion  of  the  Federal  Anti-Trust  Law,  even  though  the  rates 
and  fares  charged  were  reasonable.  (171  U.  S.  505.) 

In  the  course  of  the  opinion,  the  court  said : 

“The  expressed  purpose  of  the  agreement  in 
this  case  is,  among  other  things,  ‘to  establish 
and  maintain  reasonable  and  just  rates,  fares, 
rules  and  regulations  on  state  and  interstate 
traffic.'  *  *  * 

“So  far  as  the  establishment  of  rates  and  fares 
is  concerned  we  do  not  see  any  substantial  dif¬ 
ference  between  this  agreement  and  the  one  set 
forth  in  the  Trans-Missouri  case.  In  that  case 
the  rates  were  established  by  the  agreement, 
and  any  company  violating  the  schedule  of  rates 
as  established  under  the  agreement  was  liable 
to  a  penalty.  A  company  could  withdraw  from 
the  asociation  on  giving  thirty  days'  notice,  but 
while  it  continued  a  member  it  was  bound  to 


Ill 


charge  the  rates  fixed,  under  a  penalty  for  not 
doing  so.  In  this  case  the  companies  are  bound 
to  charge  the  rates  fixed  upon  originally  in  the 
agreement  or  subsequently  recommended  by  the 
board  of  managers,  and  the  failure  to  observe 
their  recommendations  is  deemed  a  violation  of 
of  the  agreement.  The  only  alternative  is  the 
adoption  of  a  resolution  by  the  board  of  direc¬ 
tors  of  any  company  providing  for  a  change  of 
rates  so  far  as  that  company  is  concerned,  and 
the  service  of  a  copy  thereof  upon  the  board 
of  managers  as  already  stated.  This  provision 
for  changing  rates  by  any  one  company  is  absent 
from  the  other  agreement.”  *  *  * 

“In  order,  therefore,  not  only  to  prevent 
secret  competition,  but  also  to  prevent  any  com¬ 
petition  whatever  among  the  companies  parties 
to  the  agreement,  the  provision  is  therein  made 
for  the  prompt  action  of  the  board  of  managers 
whenever  it  receives  a  copy  of  the  resolution 
adopted  by  the  board  of  directors  of  any  one 
company  for  a  change  of  the  rates  as  established 
under  the  agreement.  By  reason  of  this  pro¬ 
vision  the  board  undoubtedly  has  authority  and 
power  to  enforce  the  uniformity  of  rates  as 
against  the  offending  company  upon  pain  of  an 
open,  rigorous  and  relentless  war  of  competition 
against  it  on  the  part  of  the  whole  association. 

“A  company  desirous  of  deviating  from  the 
rates  agreed  upon  and  which  its  associates  de¬ 
sire  to  maintain  is  at  once  confronted  with  this 
probability  of  a  war  between  itself  on  the  one 
side  and  the  whole  association  on  the  other,  in 
the  course  of  which  rates  would  probably  drop 


112 


lower  than  the  company  was  proposing,  and 
lower  than  it  would  desire  or  could  afford,  and 
such  a  prospect  would  be  generally  sufficient 
to  prevent  the  inauguration  of  the  change  of 
rates  and  the  consequent  ;  competition.  Thus 
the  power  to  commence  such  a  war  on  the  part 
of  the  managers  would  operate  to  most  effectu¬ 
ally  prevent  a  deviation  from  rates  by  any  one 
company  against  the  desire  of  the  other  parties 
to  the  agreement.  Competition  would  be  pre¬ 
vented  by  the  fear  of  the  united  competition  of 

the  association  against  the  particular  member.” 
*  *  * 

“The  natural,  direct  and  necessary  effect 
of  all  these  various  provisions  of  the  agreement 
is  to  prevent  any  competition  whatever  between 
the  parties  to  it  for  the  whole  time  of  its  exists 
ence.  It  is  probably  as  effective  in  that  way  as 
would  be  a  provision  in  the  agreement  prohibit¬ 
ing  in  terms  any  competition  whatever.” 

“It  is  also  said  that  the  agreement  in  the 
first  case  conferred  upon  the  association  an  un¬ 
limited  power  to  fix  rates  in  the  first  instance, 
and  that  the  authority  was  not  confined  to  rea¬ 
sonable  rates,  while  in  the  case  now  before  us 
the  agreement  starts  out  with  rates  fixed  by 
each  company  for  itself  and  filed  with  the  in¬ 
terstate  commerce  commission,  and  which  rates 
are  alleged  to  be  reasonable.  The  distinction 
is  unimportant.  It  was  considered  in  the  other 
case  that  the  rates  actually  fixed  upon  were  rea¬ 
sonable,  while  the  rates  fixed  upon  in  this  case 
are  also  admitted  to  be  reasonable.  By  this 
agreement  the  board  of  managers  is  in  substance 


113 


and  as  a  result  thereof  placed  in  control  of  the 
business  and  rates  of  transportation,  and  its 
duty  is  to  see  to  it  that  each  company  charges 
the  rates  agreed  upon  and  receives  its  equitable 
proportion  of  the  traffic. 

The  natural  and  direct  effect  of  the  two 
agreements  is  the  same,  viz.,  to  maintain  rates 
at  a  higher  level  than  would  otherwise  prevail, 
and  the  differences  between  them  are  not  suf¬ 
ficiently  important  or  material  to  call  for  dif¬ 
ferent  judgments  in  the  two  cases  on  any  such 
ground.”  *  *  * 

“Such  an  agreement  directly  affects,  and  of 
course  is  intended  to  affect  the  cost  of  trans¬ 
portation  of  commodities,  and  commerce  con¬ 
sists,  among  other  things,  of  the  transportation 
of  commodities,  and  if  such  transportation  be 
between  states  it  is  interstate  commerce.  The 
agreement  affects  interstate  commerce  by  de¬ 
stroying  competition  and  by  maintaining  rates 
above  what  competition  might  produce. 

If  it  did  not  do  that,  its  existence  would  be 
useless,  and  it  would  soon  be  rescinded  or 
abandoned.  Its  acknowledged  purpose  is  to 
maintain  rates,  and  if  executed,  it  does  so.  It 
must  be  remembered,  however,  that  the  act  does 
not  prohibit  any  railroad  company  from  charg¬ 
ing  reasonable  rates.  If  in  the  absence  of  any 
contract  or  combination  among  the  railroad 
companies  the  rates  and  fares  would  be  less 
than  they  are  under  such  contract  or  combina¬ 
tion,  that  is  not  by  reason  of  any  provision  of 
the  act  which  itself  lowers  rates,  but  only  be¬ 
cause  the  railroad  companies  would,  as  it  is 


15471—8 


114 


#  f  -  #  > 

urged,  voluntarily  and  at  once  inaugurate  a  war 
of  competition  among  themselves,  and  thereby 
themselves  reduce  their  rates  and  fares.”  *  *  * 
“We  think  it  extends  at  least  to  the  prohi¬ 
bition  of  contracts  relating  to  interstate  com¬ 
merce,  which  would  extinguish  all  competition 
between  otherwise  competing  railroad  corpora¬ 
tions,  and  which  would  in  that  way  restrain 
interstate  trade  or  commerce.  We  do  not  think, 
when  the  grantees  of  this  public  franchise  are 
competing  railroads  seeking  the  business  of 
transportation  of  men  and  goods  from  one  state 
to  another,  that  ordinary  freedom  of  contract 
in  the  use  and  management  of  their  property 
requires  the  right  to  combine  as  one  consolidat¬ 
ed  and  powerful  association  for  the  purpose  of 
stifling  competition  among  themselves  and  of 
thus  keeping  their  rates  and  charges  higher 
than  they  might  otherwise  be  under  the  laws 
of  competition.  And  this  is  so,  even  though  the 
rates  provided  for  in  the  agreement  may  for 
the  time  be  not  more  than  are  reasonable.  They 
may  easily  and  at  any  time  be  increased.  It  is 
the  combination  of  these  large  and  powerful 
corporations,  covering  vast  sections  of  territory 
and  influencing  trade  throughout  the  whole  ex¬ 
tent  thereof,  and  acting  as  one  body  in  all  the 
matters  over  which  the  combination  extends, 
that  constitutes  the  alleged  evil.”  *  *  * 

“The  prohibition  of  such  contracts  may  in 
the  judgment  of  Congress  be  one  of  the  reason¬ 
able  necessities  for  the  proper  regulation  of  com¬ 
merce,  and  Congress  is  the  judge  of  such  neces¬ 
sity  and  propriety,  unless,  in  case  of  a  possible 


115 


gross  perversion  of  the  principle,  the  courts 
might  be  applied  to  for  relief.”  *  *  * 

“Upon  the  point  that  the  agreement  is  not 
in  fact  one  in  restraint  of  trade,  even  though  it 
did  prevent  competition,  it  must  be  admitted 
that  the  former  argument  has  now  been  much 
enlarged  and  amplified,  and  a  general  and  most 
masterly  review  of  that  question  has  been  pre¬ 
sented  by  counsel  for  the  respondents.  That 
this  agreement  does  in  fact  prevent  competition, 
and  that  it  must  have  been  so  intended,  we  have 
already  attempted  to  show.  Whether  stifling 
competition  tends  directly  to  restrain  commerce 
in  the  case  of  naturally  competing  railroads,  is 
a  question  upon  which  counsel  have  argued  with 
very  great  ability.  They  acknowledge  that  this 
agreement  purports  to  restrain  competition,  al¬ 
though,  they  say,  in  a  very  slight  degree  and  on 
a  single  point.  They  admit  that  if  competition 
and  commerce  were  identical,  being  but  dif¬ 
ferent  names  for  the  same  thing,  then,  in  as¬ 
suming  to  restrain  competition  even  so  far,  it 
would  be  assuming  in  a  corresponding  degree 
to  restrain  commerce.  Counsel  then  added  (and 
therein  we  entirely  agree  with  them)  that  no 
such  identity  can  be  pretended,  because  it  is 
plain  that  commerce  can  and  does  take  place  on 
a  large  scale  and  in  numerous  forms  without 
competition.  The  material  considerations  there¬ 
fore  turn  upon  the  effects  of  competition  upon 
the  business  of  railroads,  whether  they  are 
favorable  to  the  commerce  in  which  the  roads 
are  engaged,  or  unfavorable  and  in  restraint  of 
that  commerce.  Upon  that  question  it  is  con- 


116 


tended  that  agreements  between  railroad  com¬ 
panies  of  the  nature  of  that  now  before  us  are 
promotive  instead  of  in  restraint  of  trade. 

This  conclusion  is  reached  by  counsel  after 
an  examination  of  the  pecuiair  nature  of  rail¬ 
road  property,  and  the  alleged  baneful  effects 
of  competition  upon  it  and  also  upon  the  public. 
It  is  stated  that  the  only  resort  open  to  railroads 
to  save  themselves  from  the  effects  of  a  ruinous 
competition  is  that  of  agreements  among  them¬ 
selves  to  check  and  control  it.  A  ruinous  com¬ 
petition  is,  as  they  say,  apt  to  be  carried  on 
until  the  weakest  of  the  combatants  goes  to  de¬ 
struction.  After  that  the  survivor,  being  re¬ 
lieved  from  competition,  proceeds  to  raise  its 
prices  as  high  as  the  business  will  bear.  Com¬ 
merce,  it  is  said,  thus  finally  becomes  restrained 
by  the  effects  of  competition,  while,  at  the  same 
time,  otherwise  valuable  railroad  property  is 
thereby  destroyed  or  greatly  reduced  in  value. 
There  can  be  no  doubt  that  the  general  tendency 
of  competition  among  competing  railroads  is 
towards  lower  rates  for  transportation,  and  the 
result  of  lower  rates  is  generally  a  greater  de¬ 
mand  for  the  articles  so  transported,  and  this 
greater  demand  can  only  be  gratified  by  a  larger 
supply,  the  furnishing  of  which  increases  com¬ 
merce.  This  is  the  first  and  direct  result  of 
competition  among  railroad  carriers.”  *  *  * 

“The  natural,  direct  and  immediate  effect 
of  competition  is,  however,  to  lower  rates,  and 
to  thereby  increase  the  demand  for  commodities, 
the  supplying  of  which  increases  commerce,  and 
an  agreement,  whose  first  and  direct  effect  is 


117 


to  prevent  this  play  of  competition,  restrains 

instead  of  promoting  trade  and  commerce.” 

^  ^ 

“It  is  not  only  possible  but  probable  that 
good  sense  and  integrity  of  purpose  would  pre¬ 
vail  among  the  managers,  and  while  making  no 
agreement  and  entering  into  no  combination  by 
which  the  whole  railroad  interest  as  herein  rep¬ 
resented  should  act  as  one  combined  and  con¬ 
solidated  body,  the  managers  of  each  road  might 
yet  make  such  reasonable  charges  for  the  busi¬ 
ness  done  by  it  as  the  facts  might  justify.  An 
agreement  of  the  nature  of  this  one  which  direct¬ 
ly  and  effectually  stifles  competition,  must  be 
regarded  under  the  statute  as  one  in  restraint 
of  trade,  notwithstanding  there  are  possibilities 
that  a  restraint  of  trade  may  also  follow  compe¬ 
tition  that  may  be  indulged  in  until  the  weaker 
roads  are  completely  destroyed  and  the  survivor 
thereafter  raises  rates  and  maintains  them.” 

In  Commonwealth  vs.  Carlisle,  Brightley’s  Reports, 
p.  38  et  seq.,  Gibson,  J.,  discussed  the  law  of  conspira¬ 
cies,  with  reference  to  its  application  to  illegal  combina¬ 
tions,  as  follows: 


“The  unsettled  state  of  the  law  of  conspir¬ 
acy  has  arisen,  as  was  justly  remarked  in  the 
argument,  from  a  gradual  extension  of  the  lim¬ 
its  of  the  offense ;  each  case  having  been  decid¬ 
ed  on  its  own  peculiar  circumstances,  without 
reference  to  any  pre-established  principle.  When 
a  combination  had  for  its  direct  object  to  do  a 
criminal  act;  as  to  procure  the  conviction  of  an 
innocent  man  (the  only  case  originally  indict- 


113 


able,  and  which  afterwards  served  as  a  nucleus 
for  the  formation  of  the  entire  law  of  the  sub¬ 
ject)  the  mind  at  once  pronounced  it  criminal. 
So  where  the  act  was  lawful,  but  the  intention 
was  to  accomplish  it  by  unlawful  means;  as 
where  the  conviction  of  a  person  known  to  the 
conspirators  to  be  guilty,  was  to  be  procured 
by  any  abuse  of  his  right  to  a  fair  trial  in  the 
ordinary  course.  But  when  the  crime  became 
so  far  enlarged  as  to  include  cases  where  the 
act  was  not  only  lawful  in  the  abstract,  but  also 
to  be  accomplished  exclusively  by  the  use  of 
lawful  means,  it  is  obvious  that  distinctions  as 
complicated  and  various  as  the  relations  and 
transactions  of  civil  society,  became  instantly 
involved,  and  to  determine  on  the  guilt  or  in¬ 
nocence  of  each  of  this  class  of  the  cases,  an 
examination  of  the  nature  and  principles  of  the 
offense  became  necessary.  This  examination 
has  not  yet  been  very  accurately  made ;  for  there 
is  in  the  books  an  unusual  want  of  precision  in 
the  terms  used  to  describe  the  distinctive  fea¬ 
tures  of  guilt  or  innocence.  It  is  said  the  union 
of  persons  in  one  common  design  is  the  gist  of 
the  offense;  but  that  holds  only  in  regard  to  a 
supposed  question  of  the  necessity  of  actual 
consummation  of  the  meditated  act ;  for  if  combi¬ 
nation  were,  in  every  view,  the  essence  of  the 
crime,  it  would  necessarily  impart  criminality 
to  the  most  laudable  associations.  It  is  said  in 
Leach’s  note  to  Hawkins,  b-i,  ch.  72,  pr.  3,  that 
the  conspiracy  is  the  gist  of  the  charge,  and 
that  to  do  a  thing  lawful  in  itself  by  conspiracy, 
is  unlawful ;  but  that  is  begging  the  very  ques- 


119 


tion,  whether  a  conspiracy  exists,  and  leaves  the 
inquiry  of  what  shall  be  said  to  be  doing  a  law¬ 
ful  act  by  conspiracy,  as  much  in  the  dark  as 
ever.  Mr.  Chitty,  in  his  Criminal  Law,  (Vol. 
Ill,  page  1139),  the  best  compilation  on  the 
subject  extant,  very  truly  says,  there  are  many 
cases  in  which  an  act  would  not  be  cognizable 
by  law,  if  done  by  an  individual,  that  would, 
nevertheless,  be  the  subject  of  an  indictment  if 
effected  by  several  with  a  joint  design;  yet  he, 
too,  says  the  offense  depends  on  the  unlawful 
agreement,  and  not  on  the  act  which  is  to  follow 
it ;  the  act  when  done  being  but  evidence  of  the 
agreement.  From  this  it  might  be  inferred  that 
the  act  can  operate  only  to  show  that  an  agree¬ 
ment  of  some  sort  has  taken  place,  but  not  by 
its  nature  or  object  to  stamp  the  character  of 
guilt  on  it;  but  Chitty  himself  admits  that  it  is 
impossible  to  conceive  a  combination,  merely  as 
such,  to  be  illegal.  It  will,  therefore,  be  per¬ 
ceived  that  the  motive  for  combining,  or,  what 
is  the  same  thing,  the  nature  of  the  object  to  be 
attained  as  a  consequence  of  the  lawful  act  is, 
in  this  class  of  cases,  the  discriminative  circum¬ 
stance.  Where  the  act  is  lawful  for  an  indi- 
dividual,  it  can  be  the  subject  of  a  conspiracy, 
when  done  in  concert,  only  where  there  is  a  di¬ 
rect  intention  that  injury  shall  result  from  it, 
or  where  the  object  is  to  benefit  the  conspirators 
to  the  prejudice  of  the  public  or  the  oppression 
of  individuals,  and  where  such  prejudice  or  op¬ 
pression  is  the  natural  and  necessary  conse¬ 
quence.  To  give  appropriate  instances,  respec¬ 
tively,  referable  to  each  branch  of  this  classifi- 


120 


cation  of  criminal  intention :  if  a  number  of  per¬ 
sons  should  combine  to  establish  a  ferry,  not 
from  motives  of  public  or  private  utility,  but  to 
ruin  or  injure  the  owner  of  a  neighboring  ferry, 
the  wickedness  of  the  motive  would  render  the 
association  criminal,  although  it  is  otherwise 
where  capital  is  combined,  not  for  the  purposes 
of  oppression,  but  fair  competition  with  others 
of  the  same  calling.  So  with  respect  to  the  other 
branch.  If  the  bakers  of  a  town  were  to  com¬ 
bine  to  hold  up  the  article  of  bread,  and  by 
means  of  a  scarcity  thus  produced,  extort  an 
exorbitant  price  for  it,  although  the  injury  to 
the  public  would  be  only  collateral  to  the  object 
of  the  association,  it  would  be  indictable;  and 
to  one  or  other  of  these,  may  the  motive  in  every 
decided  case  be  traced.  Thus  a  combination  to 
marry,  under  feigned  names,  was  criminal,  be¬ 
cause  the  object  was  to  affect  the  interest  of  a 
particular  parish  under  the  poor  laws,  or  to  in¬ 
jure  an  individual  by  setting  up  a  colorable  title 
to  his  estate ;  an  agreement  between  the  officers 
of  an  army  to  throw  up  their  commissions  simul¬ 
taneously,  in  a  time  of  public  danger,  or  between 
a  number  to  hiss  a  play,  right  or  wrong,  was  in¬ 
dictable;  because  there  was  an  unmixed  motive 
of  mischief  to  the  public  or  an  individual.  So, 
on  the  other  hand,  in  a  confederacy  to  raise  the 
price  of  the  funds,  to  sell  bad  liquors,  or  to  pro¬ 
cure  the  release  of  a  prisoner  by  entering  in¬ 
sufficient  bail,  the  motive  is  not  prejudice  to  the 
public  or  an  individual,  but  undue  gain  to  the 
confederates  or  their  friends ;  which  is  unlawful 
only  in  reference  to  the  means  used  to  procure 


121 


it.  I  take  it,  then,  a  combination  is  criminal 
wherever  the  act  to  be  done  has  a  necessary  ten¬ 
dency  to  prejudice  the  public  or  to  oppress  in¬ 
dividuals  by  unjustly  subjecting  them  to  the 
power  of  the  confederates,  and  giving  effect  to 
the  purposes  of  the  latter,  whether  of  extortion 
or  mischief.  According  to  this  view  of  the  law, 
a  combination  of  employers  to  depress  the  wages 
of  journeymen  below  what  they  would  be,  if 
there  was  no  recurrence  to  artificial  means  by 
either  side,  is  criminal. 

V. 

THE  COMMON  LAW  UPON  THE  SUBJECT  OF 
TRUSTS,  MONOPOLIES  AND  COMBINATIONS 
IN  THIS  STATE  HAS  NOT  BEEN  ABROGATED 
BY  THE  ANTI-TRUST  STATUTE. 

Neither  by  express  words  nor  by  implication  is  the 
common  law  repealed,  but,  on  the  contrary,  its  existence, 
effect  and  operation,  in  conjunction  with  the  statute,  are 
specifically  recognized. 

Section  8970,  page  379,  Laws  1907,  among  other 
things,  provides : 

“The  several  circuit  courts  of  this  State  are 
hereby  invested  with  jurisdiction  to  prevent 
*  *  *  any  corporation  or  association  of  in¬ 

dividuals  from  entering  into  any  combination, 
pool  *  *  *  or  understanding  declared  illegal 
by  this  Act,  or  any  other  law  of  this  State  re¬ 
lative  to  pools,  trusts,  conspiracies  and  unlaw¬ 
ful  combinations,  and  it  shall  be  the  duty  of  the 
-  Attorney-General  *  *  *  to  institute  pro¬ 
ceedings  in  equity  to  prevent  *  *  *  all  vio- 


I 


122 

lations  of  this  Act,  and  of  any  other  law  con - 
cerning  pools,  trusts,  conspiracies  and  unlawful 
combinations.” 

Repeals  by  implication  are  not  favored  by  the  courts, 
and  where,  as  in  this  matter,  the  statute  and  common  law 
can  be  read  together  without  repugnancy,  absurdity  or 
unreasonableness,  effect  will  be  given  to  both. 

This  court,  in  Brandon  vs.  Carter,  119  Mo.  1.  c.  581, 
in  referring  to  the  common  law  as  a  part  of  our  jurispru¬ 
dence,  said: 

“Moreover  it  is  the  settled  law  in  this  State 
that  a  statutory  jurisdiction  or  remedy  does  not 
extinguish  an  ancient  jurisdiction  of  the  courts 
of  equity  over  the  same  subject  where  there  is 
nothing  in  the  statute  to  indicate  such  a  legis¬ 
lative  purpose.” 

In  Evans  vs.  McFarland,  186  Mo.  1.  c.,  728,  this  court 
said :  ■ 

“Repeals  are  not  favored  by  implication. 
(Manker  vs.  Faulhaber,  94  Mo.  430;  State  ex 
rel.  vs.  Walbridge,  119  Mo.,  383). 

In  the  latter  case  this  court  quoted  with  ap¬ 
proval  a  scholarly  work,  Anderson’s  Law  Dic¬ 
tionary,  p.  879,  as  laying  down  the  right  rule, 
thus : 

‘A  repeal  by  implication  must  be  by  neces¬ 
sary  implication.  It  is  not  sufficient  to  estab¬ 
lish  that  the  subsequent  law  or  laws  cover  some, 
or  even  all,  of  the  cases  provided  for  by  it;  for 
they  may  be  merely  affirmative  or  accumulative 
or  auxiliary.  But  there  must  be  a  positive  re¬ 
pugnancy  between  the  provisions  of  the  new  law 


123 


and  those  of  the  old ;  and,  even  then  the  old  law 
is  repealed  by  implication  only  pro  tanto  to  the 
extent  of  the  repugnancy.” 

Judge  Woodson,  in  his  able  and  elaborate  opinion  in 
State  ex  rel.  vs.  Standard  Oil  Company,  218  Mo.  1.  c.  359 
and  360,  in  discussing  certain  sections  of  our  anti-trust 
statute  and  their  effect  on  the  common  law,  said : 

“While  it  is  true  the  sections  of  the  statute 
provide  for  forfeitures  of  charters  and  revoca¬ 
tion  of  licenses  of  corporations  to  do  business 
in  this  State,  yet  they  are  not  in  derogation  of 
the  common  law  as  the  authorities  heretofore 
cited  firmly  establish ,  but  are  intended  to  be  in 
aid  of  and  supplementary  thereto,  highly  salu¬ 
tary  and  remedial  in  their  purpose.” 

And  as  was  said  in  Humphries  vs.  Davis,  100  Ind.  1. 
c.  284: 

“A  statute  is  not  to  be  construed  as  if  it 
stood  solitary  and  alone,  complete  and  perfect  in 
itself,  and  isolated  from  all  other  laws.  *  *  * 
The  completed  doctrine  resulting  from  a  bringing 
together  of  its  parts  is  that  all  laws  written  or 
unwritten,  of  whatever  sorts  and  at  whatever 
different  dates  established,  are  to  be  construed 
together,  contracting,  expanding,  limiting  and 
extending  one  another  into  one  system  of  juris¬ 
prudence  as  nearly  harmonious  and  rounded  as 
it  can  be  made  without  violating  unyielding 
written  or  unwritten  terms,” 

In  Currier  vs.  Railroad,  48  N.  H.  1.  c.  329,  while 
discussing,  in  this  connection,  the  effect  of  a  statute  de- 


124 


signed  to  prevent  consolidation  of  rival  railroads  and 
the  destruction  of  competition  among  them,  the  Supreme 
Court  of  New  Hampshire  said: 

“It  is  well  settled  that  the  law  does  not 
favor  a  repeal  by  implication,  and  the  reason 
for  this  is  obvious.  All  laws  are  presumed  to 
be  passed  with  deliberation  and  with  full  knowl¬ 
edge  of  all  existing  ones  on  the  same  subject, 
and  it  is  reasonable  to  conclude  that  the  legis¬ 
lature  in  passing  a  statute  did  not  intend  to 
interfere  with  or  abrogate  any  former  law  re¬ 
lating  to  the  same  matter,  unless  the  repug¬ 
nancy  between  the  two  is  irreconcilable.  Such 
is  the  doctrine  laid  down  in  Bowen  vs.  Lease, 
5  Hill,  221.  So  in  Bac.  Abr.  Statutes  D,  it  is 
said  that  ‘repeals  of  statutes  and  changes  of 
the  common  law  by  implication  are  not  favored 
in  law;  nor  are  they  allowed  except  the  incon¬ 
sistencies  or  repugnancies  are  plain,  for  they 
carry  with  them  a  reflection  upon  the  wisdom 
of  the  legislature;  and  such  repeals  have  ever 
been  confined  to  the  repealing  as  little  of  the 
preceding  laws  as  possible;’  and  the  same  doc¬ 
trine  is  laid  down  in  19  Vin.  Abr.  525;  and  the 
same  views  are  recognized  in  State  vs.  Wilson, 
43  N.  H.,  415;  Hall  vs.  Martin,  46  N.  H.  347, 
per  Perley,  C.  J.,  and  in  State  vs.  Otis,  42  N.  H., 
71,  and  in  authorities  cited  in  those  cases.” 

In  State  vs.  Norton  et  al.  23  Zabr.  (N.  J.)  1.  c.  40,  the 
Supreme  Court  of  New  Jersey  said : 

“The  offense  charged  in  this  indictment 
undoubtedly  constitutes  an  indictable  misde¬ 
meanor,  within  the  express  provision  of  the 


125 


statute  of  this  State  against  conspiracy.  This 
view  of  the  case  relieves  the  indictment  from 
the  substantial  objections  urged  against  it  upon 
the  argument,  and  renders  the  expression  of 
any  opinion  upon  those  points  unnecessary. 

Inasmuch,  however,  as  the  argument  at  bar 
proceeded  mainly  on  the  assumption  that  the 
offense  charged  was  not  within  the  statute,  an 
opinion  upon  the  principal  points  discussed  may 
not  be  irrelevant.  It  was  insisted,  on  the  part 
of  the  defendant,  that  the  offense  of  conspiracy, 
as  it  existed  at  the  common  law,  is  abrogated  by 
the  statute  of  New  Jersey;  and,  if  the  common 
law  offense  of  conspiracy  still  exists,  it  was 
further  insisted,  that  the  facts  charged  in  the 
indictment  constitute  no  offense  at  the  common 
law.  The  argument  proceeds  upon  the  assump¬ 
tion  that  the  act  conspired  to  be  done  was  not 
in  itself  criminal. 

The  existing  law  relative  to  the  crime  of 
conspiracy  was  first  enacted  by  the  act  of  the 
17th  February,  1829  (Pamph.  Laws  147,  Sec. 
5),  and,  by  the  revision  of  1846,  is  made  a  part 
of  the  act  for  the  punishment  of  crimes.  Rev. 
Stat.  275,  Sec.  61.  The  act  numerates  various 
particulars  in  which  the  crime  of  conspiracy 
may  consist,  and  prescribes  the  punishment  for 
the  offense  thus  constituted.  It  contains,  how¬ 
ever,  no  negative  or  exclusive  words.  It  neither 
in  terms  abolishes  the  common  law  offense,  nor 
does  it  declare  that  the  cases  enumerated  shall 
alone  constitute  the  offense.  When  the  common 
law  and  a  statute  differ,  the  common  law  gives 
place  to  the  statute,  only  where  the  latter  is 
couched  in  negative  terms,  or  where  its  matter 


126 


is  so  clearly  repugnant  that  it  necessarily  implies 
a  negative.  (1  Blac.  Com.  89.)  It  is  a  rule  of 
exposition  that  statutes  are  to  be  construed  in 
reference  to  the  principles  of  the  common  law, 
for  it  is  not  to  be  presumed  that  the  legislature 
intended  to  make  any  innovation  upon  the  com¬ 
mon  law  further  than  the  case  absolutely  re¬ 
quired.  The  law  rather  infers  that  the  act  did 
not  intend  to  make  any  alteration  other  than 
what  is  specified,  and  besides  what  has  been 
plainly  pronounced,  for  if  the  parliament  had 
had  that  design,  it  is  naturally  said  they  would 
have  expressed  it.  Dwarris  on  Stat.  695  *  *  * 
There  is  nothing  upon  the  face  of  the  statute 
which  either  directly,  or  by  necessary  or  any 
fair  implication,  abrogates  the  common  law 
crime  of  conspiracy.  Adopting  the  principle  of 
construction,  that  the  common  law  is  no  further 
altered  by  the  statute  than  is  plainly  expressed 
in,  or  necessarily  implied  by  the  act,  and  that  if 
the  legislature  had  designed  a  further  alteration, 
they  would  have  expressed  it,  we  are  of  opinion 
that  the  common  law  offense  of  conspiracy  still 
exists  in  this  state.  And  this  court,  whatever 
may  be  its  views  of  policy  or  expediency,  cannot 
treat  the  offense  as  abrogated  without  assuming 
to  itself  the  power  of  abolishing  a  part  of  the 
penal  code  which  is  recognized  and  sustained  by 
express  constitutional  provision.” 

In  a  criminal  prosecution  of  certain  coal  companies 
for  entering  into  a  combination  for  the  purpose  of  fixing 
prices  and  preventing  competition,  the  Supreme  Court 
of  Illinois  (C.  W.  &  V.  Coal  Co.  v.  People,  214  Ill.  421), 
in  discussing  the  sufficiency  of  an  indictment,  two  counts 


127 


of  which  were  based  upon  the  common  law  and  two  on  the 
anti-trust  statute,  said: 

‘‘The  contention  is  also  made  that  the  com¬ 
mon  law  on  the  subject  of  regulating  and  fixing 
prices  in  this  State  was  repealed  by  sections  46 
and  130  of  the  Criminal  Code,  and  that  for  that 
reason  the  second  and  fourth  counts  of  the  in¬ 
dictment  cannot  be  maintained.  It  is  a  common 
practice  in  the  criminal  courts  to  proceed  against 
an  offender  either  under  the  statute  or  at  the 
common  law,  or  under  both.  It  is  not  claimed 
the  common  law  upon  the  subject  of  regulating 
and  fixing  prices  in  this  State  is  repealed  by 
direct  enactment.  If  repealed,  therefore,  it 
must  be  by  implication.  The  courts  do  not 
favor  repeals  by  implication.  We  have  examined 
the  sections  of  the  statute  pointed  out  and  do 
not  think  they  are  so  far  repugnant  to  the  com¬ 
mon  law  as  to  work  a  repeal  thereof,  and  sec¬ 
tion  46  recognizes  in  express  terms  the  common 
law  of  conspiracy  upon  the  subject  under  con¬ 
sideration  to  be  in  force  in  this  State,  and  pro¬ 
vides  for  the  punishment  thereof.  There  being 
no  repugnancy  between  the  common  law  and 
the  statute,  the  contention  that  the  common  law 
has  been  repealed  is  without  force.” 

VI. 

THE  AGREEMENT  SET  OUT  IN  THE  SECOND 
COUNT  IS  EXPRESSLY  CONDEMNED  BY  OUR 
ANTI-TRUST  STATUTE. 

In  1907  the  Legislature  of  this  State  incorporated  in 
the  statutory  laws  (Laws  1907,  p.  377)  the  following 
sections : 


128 


“Section  8965 — Any  person  who  shall  cre¬ 
ate,  enter  into,  become  a  member  of  or  partici¬ 
pate  in  any  pool,  trust,  agreement,  combination, 
confederation  or  understanding  with  any  per¬ 
son  or  persons  in  restraint  of  trade  or  compe- 
tion  in  the  importation,  transportation ,  manu¬ 
facture,  purchase  or  sale  of  any  product  or  com¬ 
modity  in  this  State,  or  any  article  or  thing 
bought  or  sold  whatsoever,  shall  be  deemed  and 
adjudged  guilty  of  a  conspiracy  in  restraint  of 
trade,  and  shall  be  punished  as  provided  in  this 
act.” 

“Section  8968 — All  arrangements,  con¬ 
tracts,  agreements,  combinations  or  under¬ 
standings  made,  or  entered  into  between  any 
two  or  more  persons,  designed  or  made  with  a 
view  to  lessen  or  which  tend  to  lessen  lawful 
trade,  or  full  and  free  competition  in  the  im¬ 
portation,  transportation,  manufacture  or  sale 
in  this  State  of  any  product,  commodity  or  ar¬ 
ticle,  or  thing  bought  and  sold,  of  any  class  or 
kind  whatsoever,  *  *  *  are  hereby  declared  to 
be  against  public  policy,  unlawful  and  void ;  and 
any  person  or  persons  creating,  entering  into, 
becoming  a  member  of  or  participating  in  such 
arrangements,  contracts,  agreements,  combina¬ 
tions  or  understandings  shall  be  deemed  and  ad¬ 
judged  guilty  of  a  conspiracy  in  restraint  of 
trade,  and  punished  as  provided  for  in  this  act.” 

Language  unambiguous  and  admitting  of  but  one 
meaning  requires  no  construction. 

This  act  recognizes  no  “good  trust”  but  puts  under 
its  ban  all  arrangements  or  agreements,  whatever  the 
form,  which  lessen  or  tend  to  lessen  competition  and  re- 


i 


129 


announces  the  policy  of  this  State  to  be  that  all  such 
things  are  inimical  to  the  general  welfare,  and  this,  even 
though  the  motives  and  designs  be  beneficent  and  the 
evil  effect  not  apparent.  It  is  based  on  the  contempla¬ 
tion  that  all  such  agreements  may  be  injuriously  used 
and  made  hurtful  to  trade  and,  therefore,  declares  the 
only  safe  remedy  is  to  prohibit  all. 

Unlike  most  anti-trust  statutes,  the  provisions  of  this 
act  are  made  applicable  in  specific  terms  to  the  transpor¬ 
tation  of  freight  by  common  carriers.  Considering  the 
conditions  existing  at  the  time  of  the  passage  of  this  stat¬ 
ute,  its  contemporaneous  history,  the  discontent  and  dis¬ 
satisfaction  manifested  by  the  public  with  reference  to 
the  management  and  conduct  of  railroad  companies  in 
this  State,  their  public  character  and  vast  powers  for 
good  or  evil,  there  is  nothing  strange  in  the  action  of 
the  Legislature  in  including  in  specific  terms  such  com¬ 
panies  within  the  purview  of  the  act. 

In  this  connection,  and  while  discussing  the  applica¬ 
tion  of  the  Federal  Anti-trust  Act  to  railroad  companies, 
the  Supreme  Court  of  the  United  States,  in  U.  S.  vs. 
Freight  Association,  166  U.  S.  1.  c.  324,  said: 

“The  results  naturally  flowing  from  a  con¬ 
tract  or  combination  in  restraint  of  trade  or 
commerce,  when  entered  into  by  a  manufactur¬ 
ing  or  trading  company  such  as  above  stated, 
while  differing  somewhat  from  those  which  may 
follow  a  contract  to  keep  up  transportation 
rates  by  railroads,  are  nevertheless  of  the  same 
nature  and  kind,  and  the  contracts  themselves 
do  not  so  far  differ  in  their  nature  that  they 
may  not  all  be  treated  alike  and  be  condemned 
in  common.  It  is  entirely  appropriate  generally 


15471 — 9 


130 


to  subject  corporations  or  persons  engaged  in 
trading  or  manufacturing  to  different  rules  from 
those  applicable  to  railroads  in  their  transporta¬ 
tion  business ;  but  when  the  evil  to  be  remedied 
is  similar  in  both  kinds  of  corporations,  such  as 
contracts  which  are  unquestionably  in  restraint 
of  trade,  we  see  no  reason  why  similar  rules 
should  not  be  promulgated  in  regard  to  both,  and 
both  be  covered  in  the  same  statute  by  general 
language  sufficiently  broad  to  include  them 
both.  We  see  nothing  either  in  contemporan¬ 
eous  history,  in  the  legal  situation  at  the  time 
of  the  passage  of  the  statute,  in  its  legislative 
history,  or  in  any  general  difference  in  the  na¬ 
ture  or  kind  of  these  trading  or  manufacturing 
companies  from  railroad  companies,  which 
would  lead  us  to  the  conclusion  that  it  cannot 
be  supposed  the  legislature  in  prohibiting  the 
making  of  contracts  in  restraint  of  trade  in¬ 
tended  to  include  railroads  within  the  purview 
of  that  act.” 

The  provisions  of  this  act  are  so  plainly  applicable 
to  common  carriers  of  freight  that  we  leave  the  subject 
with  the  following  extract  from  the  Standard  Oil  case, 
supra,  1.  c.  363 : 

“No  fair-minded,  unbiased  man  can  read 
chapter  143  of  Revised  Statutes  of  1899,  with¬ 
out  logically  coming  to  the  conclusion  that  it 
was  the  intention  of  the  Legislature  to  smite 
with  a  mailed  hand  all  corporations  and  indi¬ 
viduals  doing  business  in  this  State  which  per¬ 
sistently  or  knowingly  violated  any  of  the  pro¬ 
visions  thereof;  and  pointed  out  to  the  courts 


131 


in  no  uncertain  terms  what  to  do  in  case  they 
found  any  such  corporation  or  persons  offending 
against  the  law.” 


VII. 

THE  INFORMATION  SUFFICIENTLY  CHARGES  AN 
UNLAWFUL  COMBINATION. 

From  the  authorities  heretofore  cited,  it  is  apparent 
that  the  act  of  combining  for  the  purpose  of  fixing  and 
maintaining  rates  and  of  preventing  and  lessening  com¬ 
petition  is  itself  illegal .  The  combination  and  its  ob¬ 
jects  and  purposes  being  in  themselves  illegal,  the  infor¬ 
mation  is  amply  sufficient  to  charge  the  offense. 

The  information  alleges  the  names  of  the  corpora¬ 
tions,  and  that  as  common  carriers  they  are  engaged  in 
the  transportation  of  persons  in  this  State  as  competi¬ 
tors  and  for  hire.  It  charges  the  existence  of  a  combi¬ 
nation  and  conspiracy,  whose  purposes  are  obnoxious  to 
the  common,  statutory  and  constitutional  law  and  the 
principles  of  public  policy. 

It  further  alleges  that  by  reason  of  said  unlawful 
combination,  the  trade,  traffic  and  commerce  in  this 
State  has  been  injured  and  retarded  and  that  free  and 
open  competition  in  the  transportation  of  persons  and 
property  has  been  restrained.  There  is  no  lack  of  har¬ 
mony  among  the  authorities  that  if  the  act  which  the 
conspirators  combine  to  perform  is  unlawful,  it  is  suffi¬ 
cient  to  state  the  object  of  the  conspiracy  in  general 
terms  without  setting  out  the  means  to  be  employed  in  its 
accomplishment.  In  such  cases  the  conspiracy  is  the  of¬ 
fense  and  overt  acts  but  proof  thereof. 

In  C.  W.  &  V.  C.  Company  vs.  People,  214  Ill.  421,  the 
charge  was  (1.  c.  424)  as  follows  : 


132 


i 


“Being  then  and  there  engaged  in  or  in¬ 
terested  in  the  business  of  selling  coal  to  the 
general  public  and  to  consumers  of  said  coal, 
did  then  and  there  wickedly  and  unlawfully  cre¬ 
ate,  enter  into  and  become  members  of  and  par¬ 
ties  to  a  pool,  trust,  agreement,  combination, 
confederation  and  understanding  with  each 
other  then  and  there  to  unlawfully  regulate  and 
fix  the  price  at  which  coal  should  be  sold  in  the 
State  of  Illinois.” 

In  sustaining  the  sufficiency  of  this  indictment,  the 
court  said,  1.  c.  440: 

“The  first  point  made  against  the  indict¬ 
ment  is  that  the  second  and  fourth  counts  do  not 
charge  a  conspiracy  at  common  law,  in  this: 
that  the  acts  charged  are  not  criminal  or  un¬ 
lawful.  Those  counts  charge  that  the  object 
of  the  conspiracy  was  unlawful,  and  not  that 
its  object  was  lawful  and  the  means  for  its  ac¬ 
complishment  unlawful.  It  was,  therefore,  un¬ 
necessary  to  set  out  the  means  whereby  the  con¬ 
spiracy  was  to  be  accomplished.  (Thomas  vs. 
People,  113  Ill.  531.)  Neither  was  it  necessary 
that  the  object  of  the  conspiracy  constitute  an 
offense  against  the  criminal  law  for  which  an  in¬ 
dividual  might  be  indicted  and  convicted.  (Smith 
vs.  People,  25  Ill.  9)  ;  but  if  the  object  thereof 
was  unlawful,  said  counts  sufficiently  charge  a 
conspiracy  at  common  law.  The  term  “unlawful,” 
as  here  used,  does  not  include  every  act  which 
violates  the  rights  of  a  private  individual  and 
for  which  the  law  affords  a  civil  remedy,  but  is 
held  to  include  those  acts  which,  by  reason  of 


133 


the  combination,  have  a  harmful  effect  upon 
society  and  the  public;  and  a  combination  may 
amount  to  a  conspiracy,  although  its  unaccom¬ 
plished  object  be  to  do  that  which  if  actually 
done  by  an  individual,  would  not  amount  to  an 
indictable  offense,  and  in  that  sense  a  conspiracy 
may  consist  of  a  combination  to  do  what  is  mere¬ 
ly  unlawful.  The  counts  now  under  considera¬ 
tion  charge  the  plaintiffs  in  error  with  having 
conspired  together  to  do  an  illegal  act  injurious 
to  the  public  trade — that  is  to  say,  to  regulate 
and  fix  the  price  at  which  coal  should  be  sold. 
A  combination  between  independent  producers 
of  coal  to  prevent  competition  in  the  sale  of  that 
article,  which  is  a  necessary  of  life,  is  an  act  in¬ 
imical  to  trade  and  commerce  and  detrimental 
to  the  public  and  unlawful,  and  amounts  to  a 
common  law  conspiracy,  regardless  of  what  may 
be  done  in  furtherance  of  the  conspiracy/ 

In  State  vs.  Dreany  et  al.,  69  Pac.,  182,  the  informa¬ 
tion  alleged: 

“Defendants  did  then  and  there  unlawfully 
enter  into  an  agreement,  contract  and  combina¬ 
tion  in  the  county  and  state  aforesaid,  in  the 
name  of  the  LaCrosse  Lumber  and  Grain  Com¬ 
pany  with  divers  and  sundry  other  persons, 
partnerships,  companies  and  corporations,  to- 
wit :  (naming  them) ,  who  were  at  the  said  time 
and  place  competitive  grain  buyers  and  dealers 
at  Bison,  Rush  county,  Kansas,  *  *  *  which 

said  agreement,  contract  and  combination  was 
designed  and  entered  into  with  the  intent  then 
and  there  and  thereafter,  to  establish,  settle  and 


134 


fix  the  price  said  grain  dealers  and  buyers 
should  pay  for  grain  at  said  place,  to  divide  the 
net  earnings  and  proceeds  of  said  grain  buyers 
and  dealers  at  said  place,  and  to  prevent  com¬ 
petition  between  said  grain  dealers  and  buyers 
in  the  purchase,  sale  and  transportation  of  grain 
by  said  grain  buyers  and  dealers  at  said  place.” 

In  this  case  the  court  said : 

“We  are  of  the  opinion  that  these  allega¬ 
tions  contain  a  sufficient  statement  of  the  per¬ 
sons  confederating  together,  and  the  nature  of 
the  contract  entered  into,  to  fully  apprise  de¬ 
fendants  of  the  nature  and  character  of  the  of¬ 
fense  charged,  and  that  the  motion  to  quash 

was  properly  overruled.” 

/ 

In  discussing  the  law  of  conspiracy  with  reference 
to  the  sufficiency  of  an  indictment  for  combining  to  pre¬ 
vent  workmen  from  engaging  their  services  to  certain 
quarry  companies,  the  Supreme  Court  of  Vermont,  in 
State  vs.  Stewart,  59  Vermont  1.  c.  286,  et  seq.,  stated  the 
rule,  as  to  charging  a  conspiracy,  as  follows : 

“The  reports,  English  and  American,  are 
full  of  illustrations  of  the  doctrine  that  a  com¬ 
bination  of  two  or  more  persons  to  effect  an  il¬ 
legal  purpose,  either  by  legal  or  illegal  means, 
whether  such  purpose  be  illegal  at  common  law 
or  by  statute;  or  to  effect  a  legal  purpose  by 
illegal  means,  whether  such  means  be  illegal 
at  common  law  or  by  statute,  is  a  common  law 
conspiracy.  Such  combinations  are  equally  il¬ 
legal  whether  they  promote  objects  or  adopt 
means  that  are  per  se  indictable;  or  promote 


135 


objects  or  adopt  means  that  are  per  se  oppress¬ 
ive,  immoral  or  wrongfully  prejudicial  to  the 
rights  of  others. 

If  they  seek  to  restrain  trade,  or  tend  to 
the  destruction  of  the  material  prosperity  of  the 
country,  they  work  injury  to  the  whole  public. 

These  propositions  are  the  clear  deduction 
of  the  cases  cited  in  argument,  and  breathe  a 
spirit  of  equality  and  justice  that  must  com¬ 
mend  itself  to  every  intelligent  mind. 

Counsel  have  cited  to  us  no  case  in  which 
it  has  been  ruled  that  this  crime  of  conspiracy 
does  not  exist  at  the  common  law.  We  are  re¬ 
ferred  to  Mr.  Wrights’  clever  monograph  upon 
Criminal  Conspiracies,  wherein  the  author, 
though  not  denying  that  conspiracies  to  injure 
industries  and  against  the  free  exercise  of  one’s 
calling  according  to  his  own  choice,  were  held 
to  be  criminal  at  the  common  law,  still  attempts 
to  throw  doubt  upon  the  basis  upon  which  the 
doctrine  rests. 

But  when  in  1  Hawkins’  Pleas  of  the 
Crown,  c.  27,  s.  2  (a  book  of  great  authority; 
2  Russell  on  Crimes,  674),  it  is  laid  down  “that 
all  conspiracies  whatever,  wrongfully  to  preju¬ 
dice  a  third  person,  are  highly  criminal  at  com¬ 
mon  law;’  and  in  2  Wharton’s  Criminal  Law,  s. 
2322,  it  is  said  that  ‘a  combination  is  a  con¬ 
spiracy  in  law  whenever  the  act  to  be  done  has 
a  necessary  tendency  to  prejudice  the  public,  or 
oppresses  individuals,  by  unjustly  subjecting 
them  to  the  power  of  the  confederates,  and  giv¬ 
ing  effect  to  the  purposes  of  the  latter,  whether 
of  extortion  or  mischief ;’  and  the  same  proposi¬ 
tion,  in  one  form  of  expression  and  another,  is 


i 


136 


laid  down  in  2  Bishop’s  Criminal  Law,  s.  172; 
and  in  Desty’s  Criminal  Law,  s.  11;  and  in  3 
Chitty’s  Criminal  Law,  1138 ;  and  in  Archbold’s 
Crim.  Prac.  &  PL  1830 ;  and  it  was  said  by  Den¬ 
man,  Ch.  J.,  in  Queen  vs.  Kenrick,  5  Q.  B.  49: 
'It  was  contended,  in  the  first  place,  that  the 
third  count  was  bad  by  reason  of  uncertainty, 
as  giving  no  notice  of  the  offense  charged.  The 
whole  law  of  conspiracy,  as  it  has  been  admin¬ 
istered  at  least  for  the  last  hundred  years,  has 
been  thus  called  in  question;  for  we  have  suffi¬ 
cient  proof  that  during  that  period  any  combi¬ 
nation  to  prejudice  another  unlawfully  has  been 
considered  as  constituting  the  offense  so  called. 
The  offense  has  been  held  to  consist  in  the  con¬ 
spiracy,  and  not  in  the  acts  committed  for  car¬ 
rying  it  into  effect;  and  the  charge  has  been 
held  to  be  sufficiently  made  in  general  terms  de¬ 
scribing  an  unlawful  conspiracy  to  effect  a  bad 
purpose.’  ” 

The  court  cited  a  multitude  of  cases,  both  in  England 
and  America,  which  "have  all  added  their  indorsement 
of  the  doctrine  advanced  as  early  as  the  work  of  Haw¬ 
kins,  supra,”  adding,  "it  is  manifest  that  we  are  com¬ 
pelled  to  forsake  the  literature  of  doubt  and  cleave  unto 
that  of  authority.” 

In  State  vs.  Shaw,  42  N.  H.,  393,  the  indictment  was 
as  follows : 

"Ezekiel  A.  Shaw  et  al.,  with  force  and 
arms,  being  then  and  there  possessed  of  evil 
minds  and  dispositions,  unlawfully  and  wickedly 
did  conspire,  combine,  confederate  and  agree 
together  unlawfully,  to  put  up  and  maintain 


137 


flash  boards  upon  a  certain  dam  of  the  *  *  * 

with  intent  to  defraud  John  Harvey  et  al.,  and 
compelled  said  Harvey  et  al.,  to  dispose  of  and 
part  with  their  rights  and  property  to  the  great 
damage  of  the  said  Harvey  et  al.” 

In  speaking  upon  the  objections  urged  against  this 
indictment,  the  court  said : 

“The  questions  arising  in  this  case  are  up¬ 
on  a  demurrer  to  the  bill.  Several  grounds  are 
stated  by  the  defendants’  counsel,  upon  which 
it  is  claimed  that  the  indictment  is  insufficient, 
which  objections  we  will  notice  in  the  same 
order  in  which  they  are  stated. 

1.  The  first  objection  is,  that  the  indict¬ 
ment  does  not  set  forth  in  proper  form  any 
crime,  because  it  sets  forth  no  overt  act.  The 
gist  of  the  offense  by  which  the  wrong  is  done 
— the  putting  up  of  the  flash-boards — is  not 
charged.  It  alleges  a  conspiracy  together,  but 
no  act  done  to  complete  the  conspiracy. 

This  objection  is  not  well  founded.  In  in¬ 
dictments  for  conspiracy  no  overt  acts  need  ever 
be  set  forth.  Though  it  may  be  common  to 
set  forth  such  acts  as  having  been  done  in  pur¬ 
suance  of  the  conspiracy,  and  in  order  to  effect 
the  common  purpose  of  it,  yet  this  is  not  neces¬ 
sary.  The  offense  is  complete  on  the  consum¬ 
mation  of  the  conspiracy,  and  the  overt  acts, 
though  they  may  be  set  forth  in  the  bill,  may  be 
either  regarded  as  matters  of  aggravation,  or 
discharged  as  surplusage.  Whart.  Am.  Cr. 
Law,  498.  The  conspiracy  itself  is  the  offense, 
and  provided  the  indictment  shows  either  that 


138 


it  was  for  an  unlawful  purpose,  or  to  effect  a 
lawful  purpose  by  unlawful  means,  this  will 
be  sufficient,  and  whether  anything  has  been 
done  in  pursuance  of  it  or  not,  is  immaterial. 
Broom’s  Leg.  Max.,  147 ;  Rex  vs.  Seward,  1  A. 
&  E.,  713;  Regina  vs.  Best,  2  Ld.  Ray.,  1167; 
Arch.  Cr.  PI.,  635 ;  Rex  vs.  Gill,  2  B.  &  Aid.  205 ; 
1  Salk.  174;  State  vs.  Burnham,  15  N.  H.  396. 

2.  Next  it  is  objected  that  there  is  no  al¬ 
legation  in  the  indictment  that  the  complainants 
have  been  compelled  to  dispose  of  their  proper¬ 
ty,  and  consequently  that  no  injury  of  the  kind 
complained  of  has  been  sustained. 

This  objection  is  also  without  foundation. 
This  is  not  a  civil  action  against  the  respond¬ 
ents  for  conspiring  together  and  injuring  the 
complainants,  in  which  damages  for  the  injury 
are  sought  to  be  recovered.  The  criminal  of¬ 
fense  of  conspiracy  may  be  committed  not  only 
without  any  overt  acts,  but  also  without  any 
damage  or  injury  to  those  conspired  against.  A 
conspiracy  to  commit  a  crime,  and  the  commis¬ 
sion  of  that  crime,  are  two  separate  and  dis¬ 
tinct  offenses.  To  be  sure,  in  certain  cases, 
when  a  respondent  is  guilty,  both  of  conspiring 
with  others  to  commit  a  crime,  and  also  of 
committing  the  crime  itself,  the  former  offense 
is  merged  in  the  latter.  But  no  question  of  that 
kind  arises  here.  The  offense  complained 
of  here  is  not  that  the  complainants  were  dam¬ 
aged,  nor  is  it  the  doing  of  any  act  by  the  con¬ 
spirators,  but  it  is  the  unlawfully  conspiring  to¬ 
gether. 

3.  Nor  is  there  more  weight  in  the  third 
objection,  that  the  particular  rights  and  prop- 


139 


erty  of  which  said  Harvey  and  others  were  to 
be  defrauded  by  this  conspiracy,  are  not  de¬ 
scribed  and  set  forth  in  the  bill.  It  is  not  al¬ 
leged,  and  need  not  be,  that  said  Harvey  and 
others  have  been  deprived  of  any  right,  or  have 
been  injured  in  or  defrauded  of  any  right  or 
property.  How,  then,  can  it  be  necessary  that 
the  property  or  right  should  be  particularly  de¬ 
scribed,  when  it  is  immaterial  whether  this  right 
or  property  has  been  in  any  way  affected  ?  The 
most  that  is  required  is  that  the  indictment 
should  allege  a  conspiracy  to  do  an  unlawful  act, 
or  to  do  a  lawful  act  by  the  use  of  unlawful 
means,  and  stating  the  means  thus  conspired  to 
be  used  to  accomplish  such  lawful  object;  but 
when  this  is  done  it  is  not  held  necessary  to  set 
forth  the  particular  rights,  property,  goods  or 
chattels  of  which  the  respondents  conspired  to 
defraud  the  complainant.  Whart.  Am.  Cr.  Law, 
496,  497,  and  cases  cited. 

In  United  States  vs.  Gardner,  42  Fed.  829,  the  in¬ 
dictment  averred : 

“That  Gardner  et  al.,  being  persons  of  evil 
minds  and  dispositions,  together  with  divers 
other  evil  disposed  persons,  whose  names  are  to 
the  jurors  unknown,  did  conspire  to  steal  cer¬ 
tain  chattels,  the  property  of  and  in  possession 
of  the  United  States  of  America,  and  that  there¬ 
after  said  Gardner  et  al.,  in  execution  and  fur¬ 
therance  of  said  conspiracy,  did  unlawfully  and 
feloniously  steal,  take  and  carry  away  the  chat¬ 
tels  previously  described.” 


140 


In  sustaining  that  portion  of  the  indictment  which 
charged  a  conspiracy,  the  court  said : 

“There  is  no  merit  in  the  objection  that  the 
indictment  fails  to  charge  an  overt  act  in  fur¬ 
therance  of  the  conspiracy.  *  *  *  It  is 

usual  to  set  out  the  overt  acts,  those  acts  which 
may  have  been  done  by  any  one  or  more  of  the 
conspirators  in  pursuance  of  the  conspiracy,  and 
in  order  to  effect  the  common  purpose;  but  this 
is  not  requisite  if  the  indictment  charges  what 
is  in  itself  an  unlawful  conspiracy.  The  offense 
is  complete  on  the  consummation  of  the  con¬ 
spiracy,  and  the  overt  acts  may  be  either  re¬ 
garded  as  matters  of  aggravation  or  disregard¬ 
ed  as  surplusage/’ 

In  Hazen  vs.  The  Comonwealth,  23  Pa.  St.  363,  the 
Supreme  Court  of  Pennsylvania  said : 

“Where  the  object  itself  is  unlawful,  the 
means  by  which  it  is  to  be  accomplished,  are 
not  material  ingredients  in  the  offense;  and, 
therefore,  in  such  a  case  it  is  never  necessary  to 
set  them  forth.  The  offense  is  complete  the 
moment  the  conspiracy  is  made,  whether  any 
acts  be  done  in  pursuance  of  it  or  not.  Such 
acts  form  no  part  of  the  offense,  and  the  state¬ 
ment  of  them  in  the  indictment  is  but  sur¬ 
plusage. 

It  is  by  no  means  necessary  that  the  object 
to  be  accomplished  should  be  malum  in  se” 

In  Knight  &  Jilson  Co.  vs.  Miller,  87  N.  E.  1.  c.  827, 
the  Supreme  Court  of  Indiana  said : 

“The  gravamen  of  the  offense  of  conspir¬ 
acy  is  the  combination,  and  this  is  complete  at 


141 


common  law,  by  the  combination  itself,  and  it  is 
unnecessary  to  prove  any  overt  act  as  done  in 
pursuance  of  it.  *  *  * 

The  material  question  is  the  injurious  ten¬ 
dency,  and  not  whether  the  intent  is  evil.” 

If,  in  cases  of  this  nature  the  same  strictness  were 
required  as  in  criminal  indictments,  the  information  un¬ 
der  discussion  would  be  amply  sufficient,  as  is  established 
by  all  the  authorities,  but  it  is  especially  complete  when 
measured  by  the  rules  applicable  to  such  proceedings  in 
this  State. 

In  State  ex  rel.  vs.  Standard  Oil  Company,  supra, 
this  court,  in  passing  upon  the  requirements  of  an  in¬ 
formation,  charging  an  unlawful  combination  (1.  c.  364), 
said: 

“It  is  also  contended  by  counsel  for  respond¬ 
ents  that  the  allegations  of  the  information  of 
the  existence  of  the  combination  complained  of 
are  not  sufficient  to  constitute  a  cause  of  action 
against  them.  If  we  correctly  understand  coun¬ 
sel,  their  contention  is  that  the  information  in 
this  case  should  be  drawn  with  the  same  rules 
of  strictness  which  are  applicable  to  criminal 
indictments  and  informations.  In  other  words, 
they  contend  that  the  information  should  state 
the  facts  which  constitute  the  pool,  trust  or  com¬ 
bination,  and  not  make  the  charge  in  general 
terms. 

It  is  the  formation  of  and  entering  into  the 
pool,  trust  or  combination  that  constitutes  the 
usurpation  of  corporate  powers;  and  in  such 
cases,  according  to  the  text-writers  and  adjudi¬ 
cations,  all  that  is  necessary  to  be  stated  in  the 
information  is  a  general  allegation  of  the  facts 


142 


constituting  the  misuser,  non-user  or  usurpa¬ 
tion. 

When  the  state  challenges  the  authority  of 
a  corporation  to  do  certain  things,  it  must  either 
deny  the  charge,  or,  if  it  is  exercising  the  au¬ 
thority  complained  of,  then  it  must  justify  its 
conduct  by  showing  that  it  possesses  that  power 
and  authority  under  its  charter;  and  the  state 
is  not  required  to  allege  and  prove  the  facts  in 
detail  constituting  the  mode  or  manner  in  which 
it  is  violating  the  law  and  usurping  powers  not 
granted  to  it  by  its  charter. 

In  the  case  of  State  ex  inf.  vs.  Mo.  Pac.  Ry. 
Co.,  206  Mo.  3.  c.  40,  this  Court  said : 

‘In  overruling  the  demurrers  in  these  cases 
the  court  does  not  decide  any  of  the  questions 
touching  the  merits,  which  were  discussed  in  the 
oral  arguments.  The  only  point  decided  is  that 
these  informations  are  sufficient  to  require  the 
defendant  to  answer  the  charges  made  by  the 
Attorney-General  against  them,  either  by  specif¬ 
ically  denying  the  charge  or  stating  the  facts 
which  in  the  opinion  of  the  defendants  justify 
them  in  doing  what  they  are  charged  with  doing. 

‘The  pleadings  in  a  proceeding  of  this  na¬ 
ture  are  not  governed  by  the  rules  of  pleading 
stated  in  the  Code  of  Civil  Procedure;  the  only 
provision  of  the  code  that  is  extended  to  a  pro¬ 
ceeding  in  quo  warranto  is  contained  in  section 
675,  Revised  Statutes  1899,  relating  to  amend¬ 
ments. 

‘An  information  in  the  nature  of  quo  war¬ 
ranto  by  the  Attorney- General  is  not  of  the  char¬ 
acter  of  a  petition  in  an  ordinary  case  either  in 


143 


law  or  equity;  it  is  the  official  call  of  the  law 
officer  of  the  State  on  the  corporation  or  indi¬ 
vidual  to  show  by  what  authority  it  or  he  is 
assuming  to  exercise  a  particular  franchise.  The 
rules  of  pleading  in  such  case  are  thus  stated  in 
17  Ency.  PL  and  Pr.,  457-8 :  “The  office  of  an 
information  in  the  nature  of  a  quo  warranto  is 
not  to  tender  an  issue  of  fact,  but  simply  to  call 
upon  the  defendant  in  general  terms  to  show  by 
what  warrant  or  charter  the  privilege,  franchise 
or  office  is  held  or  exercised.  Where  the  State 
calls  upon  one  to  show  cause  by  what  authority 
he  exercises  a  corporate  franchise  or  public  of¬ 
fice,  the  allegation  by  the  Attorney-General  of 
intrusion  or  usurpation  may  be  of  the  most  gen¬ 
eral  character,  while  the  defendant  is  required 
to  set  forth  particularly  the  grounds  of  his 
claim  and  the  continued  exercise  of  his  right, 
except  where  by  statute  the  pleadings  are  more 

nearly  assimilated  to  those  in  other  civil  ac- 

* 

tions.”  In  this  State  we  have  no  such  statute. 
The  same  author,  at  page  467,  says :  “When  one 
is  called  upon  by  the  State  to  show  warrant  or 
authority  for  the  exercise  of  a  franchise  or  office 
pertaining  to  the  State,  the  defendant  must,  by 
his  plea,  answer  or  return,  disclaim  all  right  to 
the  franchise  and  deny  its  usurpation,  or  allege 
facts  which,  if  true,  will  invest  him  with  the  le¬ 
gal  title  of  pleading  the  charter  or  legislative 
grant  of  the  franchise  sought  to  be  forfeited  or 
seized,  or  by  pleading  directly  and  positively  all 
the  facts  necessary  to  establish  the  title  to  the  of¬ 
fice  which  the  defendant  is  called  upon  to  justi¬ 
fy;  and  in  the  absence  of  such  an  answer  the 


144 


State  will  be  entitled  to  a  judgment  of  ouster.” 
There  is  no  such  plea  as  a  general  denial  in  a 
case  of  this  kind. 

‘If  these  defendants  are  not  doing  what  the 
law  officer  of  the  state,  in  a  general  way,  charges 
them  with  doing,  let  them  specifically  deny  the 
charge;  if  they  are  doing  it  or  doing  something 
like  it  and  think  they  are  justified  in  so  doing, 
let  them  specifically  state  it  in  their  answers. 

‘These  demurrers  go  mainly  on  the  idea  that 
the  informations  are  not  sufficiently  specific  in 
detailing  the  facts  which  constitute  the  charge 
of  usurpation;  that  idea  is  out  of  place  in  this 
kind  of  proceeding;  the  State  calls  on  these  cor¬ 
porations  to  answer,  and  the  duty  of  pleading 
specifically  the  facts  rests  on  them. 

‘In  these  cases  the  Attorney-General  has 
(doubtless  induced  by  a  practice  heretofore 
tolerated),  made  more  statements  of  facts  than 
necessary,  but  they  are  treated  as  surplusage/ 
[2  Spelling  on  Extra  Legal  Rem.,  Secs.  1851, 
1853,  1855 ;  People  ex  rel.  vs.  Railroad,  12  Mich. 
389;  17  Ency.  Pi.  and  Pr.,  pp.  457,  458;  Com¬ 
monwealth  vs.  Eastman,  1  Cush.  189 ;  State  vs. 
Parker,  43  N.  H.  83;  State  ex  inf.  vs.  Delmar 
Jockey  Club,  200  Mo.  1.  c.  55;  United  States  vs. 
Gardner,  42  Fed.  831 ;  Landringham  vs.  State ; 
49  Ind.  186;  Hazen  vs.  Commonwealth,  23  Pa. 
St.  364;  Cole  vs.  People,  84  Ill.  216.] 

And  especially  is  this  rule  applicable  in  this 
State  when  such  proceedings  are  civil  in  their 
nature ;  and  which  are  not  required  to  be  stated 
with  the  same  technical  strictness  with  which 
crimes  must  be  charged.  [State  ex  inf.  vs. 
Equitable  Loan  &  Inv.  Co.,  142  Mo.  325;  State 


145 


ex  inf.  vs.  Delmar  Jockey  Club,  200  Mo.  34.] 
But  waiving  that  point  for  the  present  and  con¬ 
ceding  that  this  proceeding  is  in  the  nature  of 
a  criminal  prosecution,  and  that  the  pleader 
should  be  held  to  the  same  strict  rules  of  plead¬ 
ing  as  is  required  in  charging  a  criminal  con¬ 
spiracy,  still  we  are  of  the  opinion  that  the  in¬ 
formation  states  a  good  cause  of  action,  for  the 
reason  that  acts  with  which  the  respondents  are 
charged  are  unlawful. 

In  such  cases  the  rule  is,  that,  ‘If  the  act 
with  which  the  conspirators  combine  to  perform 
is  unlawful,  it  is  unnecessary  to  set  out  in  the 
indictment  the  means  employed  in  accomplish¬ 
ing  it.  But  if  the  end  in  view  is  lawful  or  in¬ 
different,  and  the  conspiracy  only  becomes  crimi¬ 
nal  by  reason  of  the  unlawful  means  whereby 
it  is  to  be  accomplished,  it  becomes  necessary  to 
show  the  criminality  by  setting  out  such  unlaw¬ 
ful  means/  [4  Ency.  PI.  and  Pr.,  pp.  713,  714, 
716,  717;  Coal  Co.  vs.  People,  214  Ill.  421.]” 

If,  as  alleged,  respondents  have  entered  into  a  con¬ 
tract  to  fix,  regulate  and  maintain  the  rates  and  fares  to 
be  charged  by  each  company  in  this  State,  their  offense 
is  complete,  and  proof  of  such  a  contract,  regardless  of 
its  form  or  particular  terms,  establishes  the  offense.  It 
is  wholly  immaterial  whether  the  contract  is  written  or 
verbal,  or  what  the  particular  terms,  provisions  or  stipu¬ 
lations  may  be,  if  its  general  nature  and  effect  is  as  al¬ 
leged,  and  this  is  a  matter  of  proof,  and  as  is  said  by  this 
court  in  State  ex  rel.  vs.  Firemen’s  Fund  Ins.  Co.,  152 
Mo.  1.  c.  40: 


15471—10 


146 


“Of  course,  there  was  no  written  agreement 
forming  the  trust,  for  that  was  ‘inexpedient/ 
and  might  make  the  members  liable  to  prosecu¬ 
tion  under  the  trust  laws,  as  the  president  of  the 
club  well  and  wisely  remarked  when  the  club 
was  formed.  When  people  set  out  to  do  acts 
that  are  either  mala  in  se  or  mala  prohibita,  they 
do  not  put  up  a  sign  over  the  door  or  a  stamp 
on  the  act  declaring  their  purposes  and  intent. 

4 

Concealment  is  generally  their  prime  object. 
But  as  such  matters  exist  without  agreements 
and  rest  upon  common  understanding  and  prac¬ 
tice,  so  the  proof  of  their  existence  may  be  of 
the  same  character,  and  while  such  laws  are 
penal  in  their  nature,  and  should  be  strictly  con¬ 
strued  [State  ex  rel.  vs.  Talbot,  123  Mo.  69; 
State  ex  inf.  vs.  Bland.  144  Mo.  534] ,  neverthe¬ 
less  a  pool  or  trust  may  be  as  conclusively  proved 
by  facts  and  circumstances  as  by  direct,  written 
evidence,  for  in  this  regard  they  are  like  all 
other  frauds.” 

Under  the  general  rules  governing  such  pleadings 
the  information  is  amply  sufficient,  but  if  any  doubt  ex¬ 
ists,  reference  to  section  8977,  p.  381,  Laws  1907,  effect¬ 
ually  removes  it. 

This  section  provides: 


“In  any  suit  that  is  now  pending  or  which 
may  hereafter  be  brought  in  which  it  is  charged 
that  any  person,  corporation,  partnership  or  as¬ 
sociation  of  persons  has  created,  entered  into, 
become  a  member  of  or  participated  in  any  pool, 
trust,  agreement,  combination,  confederation  or 
understanding  in  restraint  of  trade  or  compe- 


147 


tition  with  any  other  person,  corporation,  part¬ 
nership  or  association  of  persons,  it  shall  not  be 
necessary  to  allege  or  plead  the  manner  in  which, 
or  when  or  where  such  pool,  trust,  agreement, 
combination,  confederation  or  understanding 
was  made  or  effected.” 

It  is  to  be  noted  that  this  section  is  general  in  its 
terms,  and  does  not  apply  solely  to  suits  instituted  under 
the  act  in  which  it  appears,  but  applies  to  all  actions  in¬ 
stituted  under  that  act,  or  any  other  law  concerning  pools, 
conspiracies  and  unlawful  combinations.  This  is  made 
the  more  evident  when  other  sections  of  the  same  act  are 
examined.  In  instances  in  which  sections  there  found 
are  intended  to  govern  proceedings  instituted  solely  under 
that  act,  the  limited  effect  is  expressly  declared. 

Section  897 0  of  the  same  act  also  recognizes  this  ap¬ 
plication,  as  it  provides  that: 

“The  several  circuit  courts  of  this  State 
are  hereby  invested  with  jurisdiction  to  prevent 

*  *  *  any  corporation  or  association  of  individ¬ 
uals  from  entering  into  any  combination,  pool 

*  *  *  or  understanding  declared  illegal  by  this 
act,  or  any  other  law  of  this  State  relative  to 
pools,  trusts,  conspiracies  and  unlawful  combina¬ 
tions,  and  it  shall  be  the  duty  of  the  Attorney- 
General  *  *  *  to  institute  proceedings  in  equity 
to  prevent  *  *  *  all  violations  of  this  act,  and  of 
any  other  law  concerning  pools,  trusts,  con¬ 
spiracies  and  unlawful  combinations” 


148 


VIII. 

THE  CHARTER  OF  A  PRIVATE  OR  PUBLIC  COR¬ 
PORATION  WILL  BE  FORFEITED  FOR  ANY 
WILLFUL  MISUSER  OR  ABUSE  OF  ITS  FRAN¬ 
CHISE  WHICH  INJURES  OR  MENACES  THE 
INTERESTS  OR  WELFARE  OF  THE  STATE  OR 
THE  COMMUNITY  IN  WHICH  IT  TRANSACTS 
BUSINESS,  WHETHER  THE  MISUSER  OR 
ABUSE  CONSISTS  IN  THE  EXERCISE  OF  A 
FRANCHISE  OR  POWER  NOT  CONFERRED 
UPON  THE  CORPORATION  BY  ITS  CHARTER, 
OR  IN  THE  VIOLATION  OF  PROHIBITIONS  IN 
ITS  CHARTER,  OR  IN  THE  VIOLATION  OF  THE 
COMMON,  STATUTORY  OR  CONSTITUTIONAL 
LAWS  TO  WHICH  IT  IS  SUBJECT,  OR  IN  THE 
VIOLATION  OF  ESTABLISHED  PRINCIPLES 
BASED  UPON  THE  GROUND  OF  PUBLIC 
POLICY. 

On  this  proposition  we  can  well  leave  the  law  to  de¬ 
pend  upon  the  learned  and  lucid  opinion  of  this  court,  as 
written  by  Judge  Woodson  in  State  ex  rel.  vs.  Standard 
Oil  Company  1.  c.  345,)  supra: 

“It  would  be  useless  and  would  serve  no 
good  purpose  to  go  into  the  learning  and  dis¬ 
tinctions  between  a  proceeding  by  quo 
warranto  and  a  proceeding  by  information 
in  the  nature  of  quo  warranto.  The  demarca¬ 
tion  is  well  defined,  and  has  been  long  estab¬ 
lished.  Resort,  however,  is  rarely  ever  had  to 
the  former,  while  the  latter  has  grown  into 
almost  universal  use.  Long  before  the  organi¬ 
zation  of  this  State,  the  writ  of  quo  warranto 


149 


had  become  almost,  if  not  quite,  obsolete;  and 
when  our  Constitution  was  adopted,  proceed¬ 
ings  on  information  in  the  nature  of  quo  war¬ 
ranto  were  well  understood  by  the  bench  and 
bar;  and  the  jurisdiction  conferred  by  said  con¬ 
stitutional  provision  has  been  construed  to  mean 
and  include  jurisdiction  of  an  information  in 
the  nature  of  quo  warranto.  [State  ex  rel.  vs. 
Stewart,  32  Mo.  379;  State  ex  rel.  vs.  Vail,  53 
Mo.  97.] 

In  the  discussion  of  this  question,  in  the  case 
of  State  ex  inf.  vs.  Equitable  Loan  &  Inv.  Co., 
142  Mo.  325,  this  court,  speaking  through  that 
great  jurist,  Sherwood,  J.,  said,  1.  c.  335-337 : 

‘At  common  law,  “the  old  writ  of  quo  war¬ 
ranto  is  a  civil  writ,  at  the  suit  of  the  crown; 
it  is  not  a  criminal  prosecution.  *  *  *  This  was 
the  true  old  way  of  inquiring  of  usurpations 
upon  the  crown,  by  holding  fairs  or  markets, 
viz. :  by  writs  of  quo  warranto.  Then  informa¬ 
tions  in  the  nature  of  a  quo  warranto  came  into 
use,  and  supplied  their  place.”  These  observa¬ 
tions  fell  from  Mr.  Justice  Wilmot  in  Rex  vs. 
Marsden,  3  Burr.  1817,  in  the  year  1765.  [See 
High,  Ex.  Leg.  Rem.,  Sec.  603.]  In  Blackstone, 
written  in  1758,  some  seven  years  before  the 
last-mentioned  period,  it  is  asserted  that  the  pro¬ 
ceeding  by  quo  warranto  “is  properly  a  crimi¬ 
nal  method  of  prosecution.”  [Cooley’s  Black., 
book  5,  Ch.  17,  p.  262.]  But  whatever  the 
origin  of  the  writ,  whether  civil  or  criminal, 
it  is  certain  now  at  the  present  time  and  for  a 
long  period  anterior  to  this,  it  has  been  and  is 
but  a  civil  suit.  There  is  a  distinction,  of 


150 


course,  to  be  taken,  a  distinction  pointed  out 
by  Scott,  J.,  in  State  vs.  Ins.  Co.,  8  Mo.  330, 
between  a  writ  of  quo  warranto  and  an  infor¬ 
mation  in  the  nature  of  a  quo  warranto,  but 
while  this  is  true,  yet  it  is  also  true,  even  in 
Blackstone’s  time,  the  issuance  of  the  writ  itself, 
owing  to  its  cumbersome  length,  had  long  fallen 
into  disuse,  which  resulted  in  the  modern  sub¬ 
stitutionary  and  more  speedy  method  of  the 
filing  of  ex-officio  informations  by  the  Attorney- 
General.  [Cooley’s  Black.,  book  3,  Chap.  17, 

p.  262.] 

‘Our  Constitution  provides,  in  the  third  sec¬ 
tion  of  its  sixth  article,  that  this  court  “shall 
have  power  to  issue  writs  of  habeas  corpus,  quo 
warranto,  certiorari  and  other  original  remedial 
writs,  and  to  hear  and  determine  the  same.” 
Inasmuch  as  the  issuance  of  a  writ  of  quo  war¬ 
ranto  had  not  occurred  in  England  for  centu¬ 
ries;  inasmuch  as  courts,  lawyers  and  text- 
writers  had  been  accustomed  for  hundreds  of 
years  to  use  the  expression  “writ  of  quo  war¬ 
ranto”  as  the  legal  equivalent  and  synonym  of 
“information  in  the  nature  of  quo  warranto,”  it 
will  be  presumed  that  the  framers  of  our  Con¬ 
stitution  were  not  unmindful  or  ignorant  of 
such  a  common  form  of  expression  and  the 
meaning  which  it  bore,  and,  therefore,  when 
they  used  the  words  “writ  of  quo  warranto” 
they  intended  thereby  only  to  convey  in  abbrevi¬ 
ated  form  the  meaning  that  phrase  had  for  so 
long  a  period  and  so  continuously  been  employed 
to  convey,  to  wit,  “informations  in  the  nature,” 
etc. 


151 


'Since  writing  the  above  it  has  been  found 
that  in  other  states  possessing  organic  laws  like 
our  own,  similar  conclusions  have  been  reached. 
[State  vs.  Railroad,  34  Wis.  197,  and  cases 
cited;  State  vs.  Gleason,  12  Fla.  190,  and  cases 
cited;  High’s  Ex.  Leg.  Rem.,  Secs.  610,  611.]' 
Continuing,  in  the  discussion  of  the  propo¬ 
sition  as  to  whether  or  not  an  information  in 
the  nature  of  a  quo  warranto  could  be  sustained 
against  a  corporation  for  misuse  and  abuse  of 
its  franchise  by  reason  of  its  failure  to  comply 
with  a  statute,  when  the  Legislature  had  pre¬ 
scribed  certain  penalties  to  be  imposed  in  other 
proceedings  for  such  violation,  he  said:  • 

'And  the  jurisdiction  of  this  court  in  this 
regard  being  conferred  by  the  Constitution,  it 
is  beyond  the  power  of  the  Legislature  to  take 
it  away,  and  it  will  not  be  intended  that  a  legis¬ 
lative  enactment  was  designed  to  take  such 
jurisdiction  away,  although  such  enactment 
should  confer  another  and  distinct  remedy  upon 
some  inferior  court  or  board.  [State  ex  rel. 
vs.  Allen,  5  Kan.  213;  State  ex  rel.  vs.  Mess- 
more,  14  Wis.  115;  Kane  vs.  People  ex  rel.,  4 
Neb.  509;  19  Am.  and  Eng.  Ency.  Law,  664; 
People  ex  rel.  vs.  Bristol  Co.,  23  Wend.  222; 
People  vs.  Hillsdale  Turnp.  Co.,  Ib.  254;  State 
ex  rel.  vs.  Baker,  38  Wis.  71;  High,  Ex.  Leg. 
Rem.,  Sec.  615;  2  Spelling,  Ex.  Rif.,  Secs.  1772, 
1873.]  In  consequence  of  this  well-recognized 
principle,  sections  7  and  8  of  the  Laws  of  1895, 
pages  31  and  32,  in  relation  to  the  duties  of  the 
supervisor  of  building  and  loan  associations,  to 
institute  proceedings  in  the  circuit  court  against 


152 


a  delinquent  building  and  loan  association,  and 
that  such  proceeding  shall  be  conducted  by  the 
Attorney-General,  cannot  abate  the  jurisdiction 
conferred  on  this  court  by  the  Constitution,  nor 
deprive  the  Attorney-General  of  his  common 
law  and  inherent  powers  to  file  ex-officio  infor¬ 
mations,  as  in  the  present  instance/ 

The  statutes  under  which  the  respondent  in 
the  case  just  mentioned  was  organized  and  do¬ 
ing  business  imposed  upon  it  certain  penalties 
for  violating  such  statutes;  and  also  provided 
that  if  any  such  company  should  violate  the  pro¬ 
visions  of  its  charter  or  laws  of  the  State,  the 
supervisor  of  building  and  loan  associations 
‘shall  institute  proceedings  in  the  circuit  court 
of  the  city  or  county  in  which  such  association 
has,  or  had,  its  principal  office,  to  enjoin  or  re¬ 
strain  such  association  from  the  further  prose¬ 
cution  of  its  business,  either  temporarily  or  per¬ 
petually,  or  for  such  injunction  and  dissolution 
of  such  association  and  the  settling  and  winding 
up  of  its  affairs,  or  for  any  and  all  of  said  reme¬ 
dies  combined,  as  the  supervisor  may  deem 
necessary/  [R.  S.  1899,  Secs.  1385,  1392  and 
1393.] 

It  is  thus  seen  that  those  sections  of  the 
statutes  are  just  as  full  and  explicit,  in  pre¬ 
scribing  penalties,  forfeitures  and  remedies  for 
their  violation  and  in  designating  the  court  in 
which  those  penalties  and  forfeitures  are  to  be 
imposed  and  adjudged,  as  are  the  anti-trust 
laws  now  under  consideration.  But,  notwith¬ 
standing  those  ample  statutory  provisions,  this 
court,  in  that  case,  held  that  an  information 
in  the  nature  of  quo  warranto  would  lie  to  oust 


153 


the  respondent  therein  of  its  charter  rights  for 
violating  its  charter  powers.  It  was  also  held 
therein  that  this  court  derived  its  jurisdiction 
from  the  Constitution,  and  that  even  though 
the  Legislature  had  attempted  to  deprive  it  of 
that  jurisdiction,  by  express  enactment,  it  could 
not  have  done  so,  for  the  reason  that  such  a  stat¬ 
ute  would  be  unconstitutional  and  void. 

Mr.  High,  in  his  consideration  of  this  sub¬ 
ject,  uses  the  following  language:  “A  corporate 
franchise  is  a  species  of  incorporeal  heredita¬ 
ment,  in  the  nature  of  a  special  privilege  or  im¬ 
munity,  proceeding  from  the  sovereign  power 
and  subsisting  in  the  hands  of  a  body  politic, 
owing  its  origin  either  to  an  express  grant,  or 
to  prescription  which  presupposes  a  grant.  It 
follows,  therefore,  that  the  sovereign  power  has 
the  right  at  all  times  to  inquire  into  the  method 
of  user  of  such  franchise,  or  the  title  by  which 
it  is  held,  and  to  declare  a  forfeiture  for  mis¬ 
user  or  non-user,  if  sufficient  cause  appears,  or 
to  render  judgment  of  ouster  if  the  parties  as¬ 
suming  to  exercise  the  franchise  have  no  title 
thereto.”  [High,  Ex.  Leg.  Rem.,  Sec.  648.] 

The  same  proposition  is  announced  by 
Clark  and  Marshall  in  their  work  on  Private 
Corporations,  Vol.  2,  Sec.  314b,  in  the  follow¬ 
ing  language :  ‘As  a  general  rule,  however,  the 
charter  of  a  private  corporation  will  be  for¬ 
feited,  in  proper  proceedings  by  the  State,  for 
any  wilful  or  fraudulent  misuser  or  abuse  of 
its  franchise  which  injures  or  menaces  the  in¬ 
terests  or  welfare  of  the  State  or  of  the  com¬ 
munity  in  which  it  transacts  business,  whether 


154 


the  misuser  or  abuse  consists  in  the  exercise  J 

of  a  franchise  or  power  not  conferred  upon  the 
corporation  by  its  charter,  or  in  violations  of 
prohibitions  in  its  charter,  or  in  violations  of  * 

prohibitions  in  general  laws  to  which  it  is  sub¬ 
ject,  or  in  the  violation  of  established  principles 
based  upon  the  ground  of  public  policy  .' 

And  in  State  ex  rel.  vs.  Gas  Co.,  153  Ind. 

483,  1.  c.  486,  487  and  489,  the  right  of  the 
State  to  a  forfeiture  on  account  of  the  partici¬ 
pation  in  a  combination  in  restraint  of  trade, 
is  announced  in  the  following  language: 

‘Where,  however,  the  facts  disclose  that  a 
corporation  has  failed  in  the  discharge  of  its 
corporate  duties  by  uniting  with  others  in 
carrying  out  an  agreement,  the  performance  of 
which  is  detrimental  or  injurious  to  the  public, 
it  thereby  may  be  said  to  offend  against  the 
law  of  its  creation,  and  consequently  forfeits 
its  right  longer  to  exercise  its  franchises,  and 
is  subject  to  a  judgment  of  ouster.  *  *  * 

‘Corporations  are  recognized  as  creatures 
of  the  law,  and  they  certainly  owe  obedience 
thereto,  and  when  they  fail  to  perform  duties 
which  they  were  created  to  discharge,  and  in 
which  the  public  have  an  interest,  or  where  they 
do  unauthorized  or  forbidden  acts,  the  State 
unquestionably  has  the  right,  and  it  is  its  duty, 
to  object,  and  it  may  interpose  by  information, 
and  wrest  from  the  offending  corporations  its 
franchises.  [Beach,  Pr.  Corp.,  Secs.  840  and 
841;  Cook  on  Stock  and  Corp.  Law,  Sec.  635; 

People  ex  rel.  vs.  Dashaway  Assn.,  84  Cal.  114.] 

'The  authorities  affirm ,  as  a  general  rule. 


155 


that,  if  the  act  complained  of,  by  its  results,  will 
restrict  or  stifle  competition,  the  law  will  re¬ 
gard  such  act  as  incompatible  with  public  policy, 
without  any  proof  of  evil  intent  on  the  part  of 
the  actor  or  actual  injury  to  the  public .  The 
inquiry  is  not  as  to  the  degree  of  injury  inflicted 
upon  the  public;  it  is  sufficient  to  know  that  the 
inevitable  tendency  of  the  act  is  injurious  to  the 
public.  [Salt  Co.,  vs.  Guthrie,  35  Ohio  St.  666 ; 
Swan  vs.  Chorpenning,  20  Cal.  182 ;  State  ex  rel. 
vs.  Standard  Oil  Co.,  49  Ohio  St.  137 ;  Gibbs  vs. 
Smith,  115  Mass.  592;  Richardson  vs.  Buhl,  77 
Mich.  632;  Pacific  Co.  vs.  Adler,  90  Cal.  110; 
Beach  on  Monop.  and  Ind.  Trusts,  sec.  82.’] 

In  the  case  of  State  ex  inf.  vs.  Delmar 
Jockey  Club,  200  Mo.  34,  this  same  question 
came  before  this  court.  In  that  case  a  forfeit¬ 
ure  of  the  charter  was  asked  by  the  Attorney- 
General,  because  the  club  had  so  conducted  its 
affairs  as  to  violate  the  criminal  laws  of  the 
State  against  book-making  and  pool-selling.  In 
that  case,  as  in  the  case  at  bar,  counsel  for  re¬ 
spondent  contended  that  in  view  of  the  fact  that 
the  statutes  prescribed  penalties  for  their  vio¬ 
lation,  that  constituted  the  sole  remedy  for 
their  redress,  or  that  there  must  be  a  conviction 
under  the  statute  for  its  violation  before  a  judg¬ 
ment  of  forfeiture  could  be  declared  against  the 
corporation.  In  the  discussion  of  that  case  this 
court  said,  1.  c.  50,  51  and  55: 

Tt  is  apparent  that  this  decision  is  not  an 
authority  for  the  contention  that  a  corporation 
is  not  subject  to  an  action  of  quo  warranto  to 
oust  it  of  the  franchises  conferred  upon  it  for 


156 


a  misuse  or  perversion  of  them,  or  that  a  cor¬ 
poration  is  exempt  from  the  consequences  of 
unlawful  or  wrongful  acts  committed  by  its 
agents  in  pursuance  of  the  authority  derived 
from  its  charter.  The  information  charges  that 
respondent,  “acting  through  its  officers,  agents, 
employees  and  representatives  in  charge  of  its 
business,”  engaged  in  the  acts  of  misuser  charged 
against  it  in  the  information.  It  will  thus  be 
seen  that  the  unlawful  act  charged  is  not  against 
the  officers,  agents,  employees  and  representa¬ 
tives  of  the  corporation,  but  against  the  corpo¬ 
ration  itself.  There  can  be  no  doubt  that  a  cor¬ 
poration  may  be  proceeded  against  by  quo  war¬ 
ranto  for  a  misuse  or  perversion  of  the  fran¬ 
chises  conferred  upon  it  by  the  State,  notwith¬ 
standing  its  officers  and  agents  may  at  the  same 

t 

time  be  amenable  to  the  criminal  law  for  of¬ 
fense  committed  by  them  in  the  perversion  of 
such  franchises.  If  a  corporation,  through  its 
servants  and  agents,  may  be  guilty  of  such 
abuses  of  its  franchises  as  will  subject  it  to 
ouster  by  quo  warranto,  we  can  conceive  of  no 
reason  why  such  servants  and  agents,  if  the 
acts  and  abuses  committed  by  them  be  in  viola¬ 
tion  of  the  criminal  statutes,  may  not  at  the 
same  time  be  prosecuted  by  indictment  or  in¬ 
formation.  The  one  is  not  a  bar  to  the  other 
proceeding.  Nor  are  we  prepared  to  give  as¬ 
sent  to  the  contention  that  the  defendant  cor¬ 
poration  could  not  be  held  to  answer  for  such 
wrongful  acts  until  its  agents,  guilty  of  the 
criminal  offense,  be  tried  and  convicted. 

‘It  is  argued  by  defendant  that  forfeiture 


157 


will  not  lie  for  an  illegal  act  committed  by  a 
corporation.  It  is  true,  that  not  for  every  il¬ 
legal  act  will  the  charter  of  a  corporation  be 
forfeited ;  but  the  charter  of  the  defendant  is  a 
contract  with  the  State  that  it  will  use  the  fran¬ 
chise  therein  granted ;  that  it  will  not  misuse  or 
pervert  those  franchises,  and  that  it  will  not 
engage  in  the  doing  or  carrying  on  any  business 
which  is  unlawful  or  immoral.  *  *  * 

'It  is  alleged  in  the  information  and  ad¬ 
mitted  by  the  demurrer,  that  during  the  time 
indicated,  defendant  sold  pools  to  and  registered 
bets  with  minors,  which  was  a  violation  of  law, 
it  having  no  authority  to  do  so.  To  make  and 
sell  pools  and  book-bets  to  minors  is  expressly 
prohibited  by  statute,  and  any  person  doing  so 
may  be  punished  as  for  a  misdemeanor.  [Sec. 
2193,  R.  S.  1899.]  So  that  defendant  was  with¬ 
out  authority  from  any  source  to  sell  pools  to  or 
register  bets  with  minors,  and  in  doing  so  it  was 
exercising  a  power  which  it  did  not  possess,  the 
tendency  of  which  was  immoral,  and  to  encour¬ 
age  minors  in  dissipation  and  vicious  habits. 
Defendant  now  contends  that  the  portion  of  the 
petition  which  relates  to  such  sales  does  not 
state  violations  of  law,  because  it  is  not  alleged 
that  the  respondent  knew  at  the  time  that  such 
persons  were  in  fact  minors.  The  statute  is  an 
absolute  inhibition  against  selling  pools  or  book- 
bets  to  minors,  and  it  was  entirely  unnecessary 
that  the  petition  should  allege  that  such  sales 
were  made  to  minors,  knowing  such  persons  to 
be  minors.  It  was  the  defendant's  duty  to  know 
when  sales  were  made  that  they  were  not  made 
in  violation  of  law/ 


158 


So  in  the  case  of  Terrett  vs.  Taylor,  9  Cranch  < 

1.  c.  51,  Mr.  Justice  Story  said :  ‘A  private  cor¬ 
poration  created  by  the  Legislature  may  lose  its 
franchises  by  a  misuser  or  nonuser  of  them; 
and  they  may  be  resumed  by  the  government 
under  a  judicial  judgment  upon  quo  warranto 
to  ascertain  and  enforce  the  forfeiture.  This 
is  the  common  law  of  the  land,  and  is  a  tacit 
condition  annexed  to  the  creation  of  every  such 
corporation/ 

To  the  same  effect  are:  High  on  Ex.  Leg. 

Rem.,  Secs.  648  and  649;  2  Spelling  on  Injunc¬ 
tions  and  other  Ex.  Rem.,  Secs.  1812  to  1815; 

People  vs.  Dispensary  Co.,  7  Lans.  (N.  Y.)  304; 

Bank  vs.  State,  1  Blackf.  (Ind.)  267;  5  Thomp¬ 
son  on  Corps.,  pp.  6615-16;  10  Cyc.  p.  1281;  An- 
gell  and  Ames  on  Corps.,  Sec.  774. 

It  is  thus  seen  that  a  corporation  can  so 
offend  against  the  laws  of  the  State  as  to  justify 
the  Attorney -General  in  proceeding  against  it  by 
information  in  the  nature  of  quo  warranto  to 
forfeit  its  corporate  franchise;  and  those  of¬ 
fenses  may  be  against  the  common  law  as  well 
as  against  the  statute  laws  of  the  State. 

And  it  is  wholly  immaterial,  and  the  cor¬ 
poration  cannot  justify  or  defend  its  conduct  in 
that  regard  by  a  plea,  that  such  conduct  was  a 
violation  of  the  criminal  laws  of  the  State,  by 
which  it  and  its  officers  and  agents  are  ren¬ 
dered  amenable  to  the  penalties  and  punish¬ 
ments  thereof. 

In  other  words,  the  laws  of  the  State  au¬ 
thorize  and  direct  the  Attorney-General  to  insti¬ 
tute  civil  proceedings  by  information  in  the  na- 


159 


ture  of  quo  warranto  against  any  corporation 
to  annul  its  charter  and  forfeit  its  franchises 
whenever  it  has  by  misuser,  nonuser  or  usur¬ 
pation  of  power,  so  conducted  itself  as  to  vio¬ 
late  the  laws  of  its  being  or  the  criminal  laws 
of  the  State.  If,  upon  trial,  the  corporation  is 
found  guilty,  a  decree  of  forfeiture  must  go,  and 
the  court  has  the  power,  in  addition,  to  impose 
penalties  for  such  violations  of  the  laws  as  it 
may  deem  proper.  This,  however,  does  not  pro¬ 
ceed  upon  the  theory  that  the  corporation  has 
been  guilty  of  a  crime  and  that  it  is  being  pun¬ 
ished  therefor;  but  upon  the  idea  that  there  is 
an  implied  or  tacit  agreement  on  the  part  of 
every  corporation,  by  accepting  its  charter  and 
corporate  franchises,  that  it  will  perform  its 
obligations  and  discharge  all  its  duties  to  the 
public,  and  that  by  failing  to  do  so  it  commits 
an  act  of  forfeiture  which  may  be  enforced  by 
the  State  in  the  manner  before  suggested,  [State 
ex  inf.  vs.  Delmar  Jockey  Club,  200  Mo.  1.  c.  70.] 
In  addition  thereto,  the  Legislature  has  the 
unquestionable  power  and  authority  to  declare 
the  acts  which  will  work  a  forfeiture  of  the 
charter  shall  also  constitute  a  crime,  and  subject 
the  corporation  and  its  agents  and  servants  to 
punishment  under  the  criminal  laws  of  the 
State.  [Stockwell  vs.  United  States,  13  Wall. 
531;  Waters-Pierce  Oil  Company  vs.  State  of 
Texas  (Texas  Court  of  Civil  Appeals),  106  S. 
W.  918;  State  ex  inf.  vs.  Delmar  Jockey  Club, 
200  Mo.  1.  c.  50  to  55.] 

It  must,  therefore,  follow  from  what  has 
been  said,  that  this  is  not  a  criminal  prosecu- 


160 


tion,  as  contended  for  by  respondents;  nor  is 
the  procedure  provided  for  in  section  8971,  Re¬ 
vised  Statutes,  1899,  the  exclusive  remedy  avail¬ 
able  to  the  State  to  correct  abuses  and  usurpa¬ 
tion  of  powers  by  corporations  doing  business  in 
this  State.” 

In  State  ex  rel.  vs.  Delmar  Jockey  Club,  200  Mo.  1.  c. 

70,  Judge  Graves,  speaking  for  the  court,  said: 

“These  proceedings  are  no  longer  recognized 
as  criminal  proceedings  and  have  not  been  so 
recognized  since  the  early  days  of  the  common 
law,  but  we  have  continually  imposed  what  are 
called  'fines/  a  term,  no  doubt,  coming  down 
from  the  time  when  the  proceeding  was  looked 
upon  as  a  criminal  proceeding.  The  implied 
contract  with  the  State,  when  the  charter  was 
given  respondent,  was  that  it  would  exercise 
and  use  the  granted  rights;  that  it  would  use 
none  other,  or,  stated  otherwise,  that  it  would 
not  usurp  other  rights ;  that  it  would  rightfully 
use  the  powers  granted,  and  not  misuse  them. 
A  willful  failure  of  either  of  these  covenants 
with  the  State  will  authorize  a  forfeiture,  and 
why  not  a  fine?  We  forfeit  for  nonuser,  and 
why?  Because  there  has  been  failure  to  perform 
the  obligations  to  the  State;  because  there  has 
been  a  violation  of  the  contract  with  the  State. 
Misuser  is  likewise  a  violation  of  the  implied 
agreement  with  the  State.  So  is  usurpation. 
Each  are  but  violations  of  the  implied  contract 
with  the  State,  and  for  these  violations  we  de¬ 
clare  forfeitures.  Why  not  fix  penalties  and 
punishments  in  the  one  as  in  the  other?  The 


161 


gist  of  each  in  quo  warranto  is  the  willful  viola¬ 
tion  of  the  rights  of  the  State  under  the  implied 
contract,  and  not  the  violation  of  some  criminal 
law,  for  we  do  not  try  criminal  cases  and  affix 
criminal  punishments  in  quo  warranto  proceed¬ 
ings.  The  violation  of  a  corporation’s  contract 
with  the  State  by  misuser  or  usurpation  may  be 
evidenced  by  the  fact  of  the  violation  of  some 
statute,  criminal  in  character,  but  in  this  kind 
of  proceeding  we  try  the  right  of  the  corpora¬ 
tion  to  further  hold  its  franchises,  not  the  ques¬ 
tion  of  finding  its  guilt  or  innocence  under  the 
statute  and  fixing  punishment  permitted  by  the 
statute.  It  is  the  only  way  the  State  has  of 
preventing  the  abuse  of  the  confidences  it  has 
reposed  in  these  corporate  creatures  which  are 
of  its  own  making.  This  abuse  may  be  by  non¬ 
user,  misuser  or  usurpation,  but,  in  our  judg¬ 
ment,  the  State  has  the  same  rights  in  each 
event,  both  as  to  the  forfeiture  and  the  fine/ 
[Also  see  State  ex  inf.  vs.  Equitable  Loan  & 
Inv.  Assn.,  142  Mo.  325;  State  ex  inf.  vs.  Ar¬ 
mour  Packing  Co.,  173  Mo.  356;  Waters-Pierce 
Oil  Co.  vs.  State  of  Texas  (Texas  Civ.  App.), 
106  S.  W.  918;  Stockwell  vs.  United  States,  13 
Wall.  531.] 

Franchises  may  be  forfeited  or  penalties  imposed 
for  acts  in  violation  of  public  policy. 

Upon  this  question  the  Supreme  Court  of  Indiana,  in 
the  case  of  Eel  River  R.  Co.  vs.  State  ex  rel.,  155  Ind.  1. 
c.  456,  said: 

“It  was  not  necessary  that  the  information 
should  aver  that  the  delinquent  company  had 


15471—11 


162 


done  any  act  in  contravention  of  a  prohibitory 
statute,  or  of  a  statute  imposing  a  definite  pen¬ 
alty.  A  forfeiture  of  corporate  existence  and 
franchises  may  result,  although  no  statute  in 
express  terms  enjoins  or  prohibits  the  acts  or 
omissions  complained  of.  While  certain  specific 
acts  and  omissions  may,  by  statute,  be  made 
causes  of  forfeiture  of  the  charter  or  franchises 
of  corporate  bodies,  yet  it  is  generally  recog¬ 
nized  that  misuser  and  non-user,  of  such  fran¬ 
chises,  even  where  the  specific  offenses  are  not 
particularly  defined  by  statute,  are  sufficient 
grounds  for  proceedings  for  such  forfeiture  and 
dissolution.  State  Bank  vs.  State,  1  Blackf.  267, 
12  Am.  Dec.  234;  People  vs.  Kingston,  etc.,  R. 
Co.,  23  Wend.  193;  People  vs.  Bristol,  etc.,  Co., 
23  Wend.  222;  Thompson  vs.  People,  23  Wend. 
537 ;  People  vs.  Hillsdale,  etc.,  Co.,  23  Wend. 
254;  People  vs.  Bank,  6  Cow.  (N.  Y.)  216; 
State  vs.  Seneca  County  Bank,  5  Ohio  St.  171 ; 
St.  Louis,  etc.,  Co.  vs.  Sandoval,  etc.,  Co.,  116 
Ill.  170,  5  N.  E.  370;  Ward  vs.  Sea  Ins.  Co.,  7 
Paige  (N.  Y.)  294;  In  re  Jackson  Ins.  Co.,  4 
Sandf.  Ch.  (N.  Y.)  596;  5  Thompson  on  Corp. 
pr.  6618;  Dartmouth  College  vs.  Woodward,  4 
Wheat  519,  4  L.  ed.  629 ;  Morawetz  on  Pr.  Corp., 
pr.  1114,  1115;  N.  Y.,  etc.,  R.  Co.  vs.  Newman, 
17  How.  30,  15  L.  ed.  27 ;  Territt  vs.  Taylor,  9 
Cranch  52,  3  L.  ed.  650 ;  State  vs.  Minnesota  R. 
Co.,  36  Minn.  246,  30  N.  W.  816;  State  vs.  Port¬ 
land,  etc.,  Co.,  153  Ind.  483 ;  Pennsylvania  R.  Co. 
vs.  St.  Louis,  etc.,  Co.,  118  U.  S.  290,  630,  6 
Sup.  Ct.  1094,  7  Sup.  Ct.  24,  30  L.  ed.  83,  284; 
Board,  etc,  vs.  LaFayette,  etc.,  R.  Co.,  50  Ind. 


163 


85;  Thomas  vs.  West  Jersey  R.  Co.,  101  U.  S. 
71,  83;  Elliott  on  Railroads,  pr.  48,  49  and  50, 
note  5;  State  ex  rel.  vs.  Atkinson,  etc.,  R.  Co., 
24  Neb.  143,  38  N.  W.  43,  2  L.  R.  A.  564,  8  Am. 
St.  164,  and  notes.” 

Spelling  on  Extraordinary  Remedies,  Vol.  2,  Pr. 

1820,  says: 

“There  is  substantial  harmony  between  the 
English  and  American  definitions  of  monopoly, 
the  decisions  of  the  two  countries  agreeing  that 
contracts  in  restraint  of  trade  are  illegal.  When 
corporations  have  entered  into  a  combination  or 
‘trust/  there  are  two  grounds  upon  which  the 
corporations  themselves  are  open  to  attack  at 
suit  of  the  state  in  quo  warranto  :  (1)  That 

they  have  attempted  to  grant  away  franchises 
conferred  upon  them  in  trust,  the  transfer  be¬ 
ing  a  breach  of  the  implied  condition  that  the 
particular  grantees  shall  retain  and  execute  the 
trust;  (2)  that  in  making  the  contract,  the  re¬ 
sult  of  which  is  the  creation  of  a  monopoly,  they 
are  guilty  of  an  abuse  of  their  franchises  in 
having  employed  them  in  doing  an  illegal  act. 

An  important  rule,  well  established,  is  that 
in  a  proceeding  against  a  corporation  by  quo 
warranto  for  having  formed  with  others  a  mo¬ 
nopoly  in  the  shape  of  a  ‘trust/  no  actual  pub¬ 
lic  injury  need  be  proven,  but  it  will  be  pre¬ 
sumed  when  an  agreement  is  shown  which,  if 
carried  out,  will  obviously  result  to  the  public 
detriment.  An  attempt  by  several  combining 
corporations  to  suppress  competition  may  well 
be  viewed  in  the  light  of  an  unlawful  conspiracy 


164 


in  the  name  of  the  corporation,  which  is  itself 
an  illegal  act  warranting  the  state  in  resuming 
its  charter  aside  from  any  contemplated  injury 
to  economic  interests  ” 

In  Stockton  vs.  Central  Railroad  Company,  50  N.  J., 
Eq.  (5  Dick.)  52,  71,  the  court  said: 

“Corporate  bodies  that  engage  in  a  public 
or  quasi  public  occupation  are  created  by  the 
State  upon  the  hypothesis  that  they  will  be  a  pub¬ 
lic  benefit.  *  *  *  While  the  state  confers  spe¬ 
cial  privileges  upon  these  favorites,  it  at  the 
same  time  exacts  from  them  duties  which  also 
tend  to  the  public  welfare.  The  whole  scheme 
of  the  laws  of  their  organization  is  to  equip  and 
control  them  as  instruments  for  the  public  good. 
Such  corporations  hold  their  powers  not  merely 
in  trust  for  the  pecuniary  profit  of  their  stock¬ 
holders,  but  also  in  trust  for  the  public  weal. 
The  impress  for  public  good  is  stamped  upon 
their  very  being,  and  it  becomes  a  duty  which, 
though  not  prescribed  in  express  language  of 
the  law  is  to  be  implied  from  the  nature  of  every 
power  conferred.  When,  therefore,  it  appears 
that  such  a  corporation,  unmindful  of  this  plain 
duty,  acts  prejudicially  to  the  public  in  order 
to  make  undue  gains  and  profits  for  its  stock¬ 
holders,  it  uses  its  powers  in  a  manner  not  con¬ 
templated  by  the  law  which  confers  them.  The 
use  becomes  abuse,  and  is  tantamount  to  excess 
of  poiver.”  *  *  * 

“It  appears  that  the  Attorney-General  has 
the  election  in  his  discretion  whether,  in  cases 
of  excess  in  corporate  powers,  he  will  proceed 


165 


at  law  to  forfeit  the  charter  and  franchises  or 
apply  in  equity  for  a  restraint  of  the  excess. 
Both  tribunals  are  open  to  him.” 

In  Attorney-General  vs.  Delaware  &  Bound  Brook 
By.  Co.,  12  C.  E.  Gr.,  631,  633,  in  announcing  the  opinion 
of  the  court,  Mr.  Justice  Dixon  said: 

“In  equity  as  in  the  law  court,  the  Attor¬ 
ney-General  has  the  right  in  cases  where  the 
property  of  the  sovereign  or  the  interests  of  the 
public  are  directly  concerned,  to  institute  suit 
by  what  may  be  called  civil  information  for  their 
protection.  The  State  is  not  left  without  re¬ 
dress  in  its  own  courts,  because  no  private  citi¬ 
zen  chooses  to  encounter  the  difficulty  of  de¬ 
fending  it,  but  has  appointed  this  high  public 
officer,  on  whom  it  has  cast  the  responsibility, 
and  to  whom,  therefore,  it  has  given  the  right 
of  appearing  in  its  behalf  and  invoking  the  judg¬ 
ment  of  the  court  on  such  questions  of  public 
moment.” 

IX. 

ALL  DOMESTC  AND  FOREIGN  RAILWAY  COM¬ 
PANIES,  WHILE  ENGAGED  IN  INTRA-STATE 
BUSINESS,  ARE  AMENABLE  TO  THE  STATE 
LAWS  GOVERNING  SUCH  BUSINESS. 

With  regard  to  the  contention  that  a  legislative  pro¬ 
hibition  against  the  consolidation  of  parallel  and  com¬ 
peting  lines  of  railway  was  an  interference  with  the 
power  of  Congress  over  interstate  commerce,  the  Su¬ 
preme  Court  of  the  United  States  in  L.  &  N.  R.  R.  vs* 
Kentucky,  161  U.  S.  1.  c.  701,  et  seq.,  said: 


166 


“All  such  regulations  interfere  indirectly, 
more  or  less,  with  commerce  between  the  states, 
in  the  fact,  that  they  impose  a  burden  upon  the  in¬ 
struments  of  such  commerce,  and  add  something 
to  the  cost  of  transportation,  by  the  expense 
incurred  in  conforming  to  such  regulations. 
These  are,  however,  like  the  taxes  imposed  up¬ 
on  railways  and  their  rolling  stock,  which  are 
more  or  less,  according  to  the  policy  of  the 
State  within  which  the  roads  are  operated,  but 
are  still  within  the  competency  of  the  Legisla¬ 
ture  to  impose.  It  is  otherwise,  however,  with 
respect  to  taxes  upon  their  franchises  and  re¬ 
ceipts  from  interstate  comerce,  which  are 
treated  as  a  direct  burden.  There  are  certain 
intimations  in  some  of  our  opinions,  which 
might  perhaps  lead  to  an  inference  that  the 
police  power  cannot  be  exercised  over  a  subject 
confined  exclusively  to  Congress  by  the  Federal 
Constitution.  But  while  this  is  true  with  re¬ 
spect  to  the  commerce  itself,  it  is  not  true  with 
respect  to  the  instruments  of  such  commerce. 

It  was  said  in  Sherlock  vs.  Ailing,  93  U.  S. 
99,  103,  104,  and  quoted  with  approbation  in 
Plumley  vs.  Massachusetts,  155  U.  S.  461,  that 
fin  conferring  upon  Congress  the  regulation  of 
commerce,  it  was  never  intended  to  cut  the  State 
off  from  legislating  on  all  subjects  relating  to 
the  health,  life  and  safety  of  their  citizens, 
though  the  legislation  might  indirectly  affect  the 
commerce  of  the  country.  Legislation  in  a  great 
variety  of  ways,  may  affect  the  commerce  and 
persons  engaged  in  it  without  constituting  a 
regulation  of  it,  within  the  meaning  of  the  Con- 


167 


stitution  *  *  *  and  it  may  be  said,  generally, 
that  the  legislation  of  a  State,  not  directed 
against  commerce,  or  any  of  its  regulations,  but 
relating  to  the  rights,  duties  and  liabilities  of 
citizens,  and  only  indirectly  and  remotely  affect¬ 
ing  the  operations  of  commerce,  is  of  obligatory 
force  upon  citizens  within  its  territorial  juris¬ 
diction,  whether  on  land  or  water,  or  engaged 
in  commerce,  foreign  or  interstate,  or  in  any 
other  pursuits.' 

It  has  never  been  supposed  that  the  domi¬ 
nant  power  of  Congress  over  interstate  com¬ 
merce  took  from  the  states  the  power  of  legis¬ 
lation  with  respect  to  the  instruments  of  such 
commerce,  so  far  as  the  legislation  was  within 
its  ordinary  police  powers.  Nearly  all  the  rail¬ 
ways  in  the  country  have  been  constructed  un¬ 
der  state  authority,  and  it  cannot  be  supposed 
that  they  intended  to  abandon  their  power  over 
them  as  soon  as  they  were  finished.  The  power 
to  construct  them  involves  necessarily  the  power 
to  impose  such  regulations  upon  their  opera¬ 
tions  as  a  sound  regard  for  the  interests  of  the 
public  may  seem  to  render  desirable.  In  the 
division  of  authorities  with  respect  to  interstate 
railways,  Congress  reserves  to  itself  the  superi¬ 
or  right  to  control  their  commerce  and  forbid 
interference  therewith;  while  to  the  states  re¬ 
mains  the  power  to  create  and  to  regulate  the 
instruments  of  such  commerce,  so  far  as  neces¬ 
sary  to  the  conservation  of  the  public  interests. 

If  it  be  assumed  that  the  states  have  no 
right  to  forbid  the  consolidation  of  competing 
lines,  because  the  whole  subject  is  within  the 


168 


control  of  Congress,  it  would  necessarily  follow 
that  Congress  would  have  the  power  to  author¬ 
ize  such  consolidation  in  defiance  of  State  legis¬ 
lation — a  proposition  which  only  needs  to  be 
stated  to  demonstrate  its  unsoundness.,, 

In  State  ex  rel.  vs.  Standard  Oil  Company,  supra, 
1.  c.  376,  this  court,  in  this  connection,  said: 

“It  is  also  contended  that  these  anti-trust 
statutes  violate  the  provisions  of  section  8  of 
article  I  of  the  Constitution  of  the  United  States, 
which  gives  Congress  the  power  to  regulate 
commerce  with  foreign  countries  and  among 
the  several  states  and  Indian  tribes. 

It  was  not  the  intention  of  the  Legislature, 
-  by  the  enactment  of  those  statutes,  to  interfere 
with  interstate  commerce,  but  the  clear  inten¬ 
tion  was  to  prevent  the  formation  and  main¬ 
tenance  of  pools,  trusts  and  combinations  in  re¬ 
straint  of  interstate  (intra- state?)  commerce. 

The  Legislature  has  no  power  or  authority 
to  prevent  respondents  from  carrying  on  inter¬ 
state  trade,  for  the  reason  that  power  is  vested 
in  and  rests  with  Congress;  but  it  does  possess 
the  power  to  authorize  the  courts  to  forfeit  the 
charters  of  all  corporations  organized  and  ex¬ 
isting  under  the  laws  of  this  State  for  the  usur¬ 
pation  of  powers  not  granted  to  them,  or  for 
misuser  or  non-user  of  those  granted ;  and  it  is 
wholly  immaterial  whether  those  corporations 
are  engaged  in  interstate  commerce  or  not. 

The  Legislature  also  possesses  the  undoubt¬ 
ed  authority  to  revoke  or  forfeit  the  license  is¬ 
sued  to  any  foreign  corporation  authorizing  it 


169 


i 


to  do  an  intrastate  business  in  this  State.  The 
revocation  of  such  a  license  in  no  manner  inter¬ 
feres  with  interstate  commerce.  The  authority 
to  conduct  such  business  is  obtained  under  the 
acts  of  Congress  and  not  by  virtue  of  the  laws 
of  the  State.  A  license  from  the  State  can 
neither  confer  nor  take  away  the  authority  or 
right  of  a  foreign  corporation  to  carry  on  in¬ 
terstate  commerce ;  and,  that  being  true,  we  are 
unable  to  see  in  what  possible  manner  the  for¬ 
feiture  of  such  a  license,  that  is,  a  license  which 
only  authorizes  a  foreign  corporation  to  do  an 
intrastate  business,  can  possibly  offend  against 
section  8  of  article  I  of  the  Federal  Constitu¬ 
tion,  which  only  applies  to  interstate  commerce. 

We  are,  therefore,  of  the  opinion  that  this 
contention  of  respondents  is  not  well  founded. 

Nor  are  we  able  to  concur  with  the  learned 
counsel  for  respondents  in  their  contention  that 
sections  8965,  8966,  8967,  8971,  8972  and  8978, 
Revised  Statutes,  1899,  are  void  for  the  reason 
that  they  violate  section  10  of  article  I  of  the 
Constitution  of  the  United  States,  which  pro¬ 
vides  that  no  state  shall  enact  any  law  which 
will  impair  the  obligations  of  a  contract. 

Clearly  that  section  of  the  Constitution  has 
no  application  to  a  license  issued  by  the  State  to 
a  foreign  corporation  to  do  business  herein,  for 
the  reason  that  when  it  accepted  the  license,  it 
impliedly,  at  least,  agreed  to  transact  such  busi¬ 
ness  under  and  in  obedience  to  the  laws  of  this 
State  in  the  same  manner  as  a  domestic  corpor¬ 
ation  should  transact  similar  business,  and  that 
if  it  violated  the  laws  of  the  State,  then  it  would 


170 


thereby  forfeit  its  rights  to  such  license,  in  the 
same  manner  that  the  domestic  corporations 
would  forfeit  their  charter  rights  by  offending 
against  the  laws.” 

And  as  is  said  by  the  U.  S.  Supreme  Court  in  Orient 
Insurance  Company  vs.  Daggs,  172  U.  S.  1.  c.  566 : 

“That  which  a  state  may  do  with  corpora¬ 
tions  of  its  own  creation  it  may  do  with  foreign 
corporations  admitted  into  the  State.  This 
seems  to  be  denied,  if  not  generally,  at  least  as 
to  plaintiff  in  error.  The  denial  is  extreme  and 
cannot  be  maintained.  The  power  of  a  state  to 
impose  conditions  upon  foreign  corporations  is 
certainly  as  extensive  as  the  power  over  domes¬ 
tic  corporations.” 

On  the  question  of  the  application  of  our  anti-trust 
laws  to  contracts  to  be  performed  in  this  State,  the 
court,  in  Commission  Co.  vs.  Spencer,  205  Mo.  1.  c.  118, 
said : 

“It  is  contended  in  behalf  of  the  plaintiff 
that  the  conduct  on  the  part  of  the  defendants 
in  creating  a  corner  in  the  market  for  No.  2  red 
winter  wheat  was  an  illegal  act  denounced  by 
the  act  of  Congress  (26  U.  S.  Stat.  at  Large,  p. 
209)  as  well  as  by  the  statute  of  Missouri  (Sec. 
8978,  R.  S.,  1899).  Since  the  contracts  we  are 
dealing  with  now  were  made  in  Missouri,  to  be 
performed  in  Missouri,  the  Federal  statute  has 
nothing  to  do  with  them,  and  this  is  so,  al¬ 
though  the  evidence  shows  that  defendants 
made  some  other  purchases  through  Chicago 
agencies  for  No.  2  red  winter  wheat,  to  be  de- 


171 


livered  in  St.  Louis  during  December,  1903,  still 
those  also  were  contracts  made  in  Missouri,  to 
be  performed  here.” 

That  the  regulation  of  a  State’s  internal  trade  and 
commerce  is  left  to  the  State  itself,  and  is  not  within  the 
powers  granted  to  Congress,  was  decided  as  early  as 

1824. 

In  the  case  of  Gibbons  vs.  Ogden,  9  Wheat.,  1.  c.  194- 
195,  Chief  Justice  Marshall,  in  discussing  the  interstate 
commerce  clause  of  the  Federal  Constitution,  and  the 
power  of  Congress  thereunder  to  regulate  navigation, 
declared  that  “commerce”  included  the  transportation  of 
both  freight  and  passengers,  but  added: 

“It  is  not  intended  to  say  that  these  words 
comprehend  that  commerce,  which  is  completely 
internal,  which  is  carried  on  between  man  and 
man  in  a  State,  or  between  different  parts  of  the 
same  State,  and  which  does  not  extend  to  or 
affect  other  states.  Such  a  power  would  be  in¬ 
convenient,  and  is  certainly  unnecessary. 

Comprehensive  as  the  word  among’  is,  it 
may  very  properly  be  restricted  to  that  com¬ 
merce  which  concerns  more  states  than  one. 
The  phrase  is  not  one  which  would  probably 
have  been  selected  to  indicate  the  completely  in¬ 
terior  traffic  of  a  state,  because  it  is  not  an  apt 
phrase  for  that  purpose;  and  the  enumeration 
of  the  particular  classes  of  commerce  to  which 
the  power  was  to  be  extended,  would  not  have 
been  made,  had  the  intention  been  to  extend  the 
power  to  every  description.  The  enumeration 
presupposes  something  not  enumerated,  and 
that  something,  if  we  regard  the  language  or 


172 


the  subject  of  the  sentence,  must  be  the  exclu¬ 
sively  internal  commerce  of  a  State.  The  ge¬ 
nius  and  character  of  the  whole  government 
seem  to  be,  that  its  action  is  to  be  applied  to  all 
the  external  concerns  of  the  nation,  and  to  those 
internal  concerns  which  affect  the  States  gener¬ 
ally;  but  not  to  those  which  are  completely 
within  a  particular  State,  which  do  not  affect 
other  States,  and  with  which  it  is  not  necessary 
to  interfere,  for  the  purpose  of  executing  some 
of  the  general  powers  of  the  government.  The 
completely  internal  commerce  of  a  State,  then, 
may  be  considered  as  reserved  for  the  State  it¬ 
self.” 

In  Thorpe  vs.  R.  &  B.  Co.,  27  Vt.,  142,  the  court,  in 
discussing  the  right  of  the  State  to  regulate  corporations, 
said : 

“It  has  never  been  questioned,  so  far  as  I 
know,  that  the  American  legislatures  have  the 
same  unlimited  power  in  regard  to  legislation 
which  resides  in  the  British  parliament,  except 
where  they  are  restrained  by  written  constitu¬ 
tions.  That  must  be  conceded,  I  think,  to  be  a 
fundamental  principle  in  the  political  organiza¬ 
tions  of  the  American  states.  We  cannot  well 
comprehend  how,  upon  principle,  it  should  be 
otherwise.  The  people  must,  of  course,  possess 
all  legislative  power  originally.  They  have  com¬ 
mitted  this  in  the  most  general  and  unlimited 
manner  to  the  several  state  legislatures,  saving 
only  such  restrictions  as  are  imposed  by  the 
Constitution  of  the  United  States,  or  of  the  par¬ 
ticular  state  in  question.”  *  *  * 


173 


It  is  a  conceded  point,  upon  all  hands,  that 
the  parliament  of  Great  Britain  is  competent  to 
make  any  law  binding  upon  corporations,  how¬ 
ever  much  it  may  increase  their  burdens  or  re¬ 
strict  their  powers,  whether  general  or  organic, 
even  to  the  repeal  of  their  charters. 

This  extent  of  power  is  recognized  in  the 
case  of  Dartmouth  College  vs.  Woodward,  4 
Wheaton  518,  and  the  leading  authorities  are 
there  referred  to.  Any  requisite  amount  of  au¬ 
thority,  giving  this  unlimited  power  over  cor¬ 
porations,  to  the  British  Parliament,  may  read¬ 
ily  be  found.  And  if,  as  we  have  shown,  the 
several  state  legislatures  have  the  same  extent 
of  legislative  power,  with  the  limitations  named, 
the  inviolability  of  these  artificial  bodies  rests 
upon  the  same  basis  in  the  American  states  with 
that  of  natural  persons. 

The  discussion  of  the  power  of  the  states  over  com¬ 
merce  in  the  case  of  Covington,  etc.,  Bridge  Co.  vs.  Ken¬ 
tucky,  154  U.  S.  1.  c.  209,  et  seq.,  is  of  some  value  here. 

In  that  case  the  Court  said: 

“The  power  of  Congress  over  commerce  be¬ 
tween  the  states  and  the  corresponding  power 
of  individual  states  over  such  commerce  have 
been  the  subject  of  such  frequent  adjudication 
in  this  court,  and  the  relative  powers  of  Con¬ 
gress  and  the  states  with  respect  thereto  are 
so  well  defined,  that  each  case,  as  it  arises,  must 
be  determined  upon  principles  already  settled, 
as  falling  on  one  side  or  the  other  of  the  line  of 
demarcation  between  the  powers  belonging  ex¬ 
clusively  to  Congress,  and  those  in  which  the 
action  of  the  state  may  be  concurrent.  The 


174 


adjudications  of  this  court  with  respect  to  the 
power  of  the  states  over  the  general  subject  of 
commerce  are  divisible  into  three  classes :  First, 
those  in  which  the  power  of  the  state  is  ex¬ 
clusive;  second,  those  in  which  the  state  may 
act  in  the  absence  of  legislation  by  Congress; 
third,  those  in  which  the  action  of  Congress  is 
exclusive,  and  the  states  cannot  interfere  at  all. 

The  first  class,  including  all  those  wherein 
the  states  have  plenary  power,  and  Congress 
has  no  right  to  interfere,  concern  the  strictly 
internal  power  of  the  state,  and  while  the  regu¬ 
lations  of  the  state  may  affect  interstate  com¬ 
merce  indirectly,  their  bearing  upon  it  is  so  re¬ 
mote  that  it  cannot  be  termed  in  any  just  sense 
an  interference.  Under  this  power,  the  states 
may  authorize  the  construction  of  highways, 
turnpikes,  railways  and  canals  between  points 
in  the  same  state,  and  regulate  the  tolls  for  the 
use  of  the  same,  Railroad  vs.  Maryland,  21  Wall 
456;  and  may  authorize  the  building  of  bridges 
over  non-navigable  streams,  and  otherwise 
regulate  the  navigation  of  the  strictly  internal 
waters  of  the  state — such  as  do  not,  by  them¬ 
selves  or  by  connection  with  other  waters,  form 
a  continuous  highway  over  which  commerce  is 
or  may  be  carried  on  with  other  states  or  for¬ 
eign  countries.  Veazie  vs.  Moor,  14  How.  568; 
The  Montello,  11  Wall.  411;  S.  C.  20  Wall.  480. 
This  is  true  notwithstanding  the  fact  that  the 
goods  or  passengers  carried:  or  traveling  over 
such  highways  between  points  in  the  same  state 
may  ultimately  be  destined  for  other  states, 
and,  to  a  slight  extent,  the  state  regulations 
may  be  said  to  interfere  with  interstate  com- 


175 


merce.  The  states  may  also  exact  a  bonus,  or 
even  a  portion  of  the  earnings  of  such  corpora¬ 
tion,  as  a  condition  to  the  granting  of  its  char¬ 
ter.  Society  for  Savings  vs.  Coite,  6  Wall.  594; 
Provident  Institution  vs.  Massachusetts,  6  Wall. 
611;  Hamilton  Co.  vs.  Massachusetts,  6  Wall. 
632;  Railroad  Co.  vs.  Maryland,  21  Wall.  456; 
Ashley  vs.  Ryan,  153  U.  S.  436. 

Congress  has  no  power  to  interfere  with 
police  regulations  relating  exclusively  to  the  in¬ 
ternal  trade  of  the  states.  United  States  vs. 
Dewitt,  9  Wall.  41;  Patterson  vs.  Kentucky,  97 
U.  S.  501,  nor  can  it  by  exacting  a  tax  for  carry¬ 
ing  on  a  certain  business  thereby  authorize 
such  business  to  be  carried  on  within  the  limits 
of  a  state.  License  Tax  Cases,  5  Wall.  462,  470, 
471.  The  remarks  of  the  Chief  Justice  in  this 
case  contain  the  substance  of  the  whole  doc¬ 
trine:  'Over  this’  (the  internal)  'com¬ 
merce  and  trade,  Congress  has  no  power  of 
regulation,  nor  any  direct  control.  This  power 
belongs  exclusively  to  the  states.  No  inter¬ 
ference  by  Congress  with  the  business  of  citi¬ 
zens  transacted  within  a  state  is  warranted  by 
the  Constitution,  except  such  as  is  strictly  in¬ 
cidental  to  the  exercise  of  powers  clearly 
granted  to  the  Legislature.  The  power  to  au¬ 
thorize  a  business  within  a  state  is  plainly  re¬ 
pugnant  to  the  exclusive  power  of  the  state  over 
the  same  subject.’ 

It  was  at  one  time  thought  that  the  ad¬ 
miralty  jurisdiction  of  the  United  States  did 
not  extend  to  contracts  of  affreightment  be¬ 
tween  ports  of  the  United  States,  though  the 
voyage  were  performed  upon  navigable  waters 


176 


of  the  United  States.  Allen  vs.  Newberry,  21 
How.  244.  But  later  adjudications  have  ignored 
this;  distinction  as  applied  to  those  waters.  The 
Belfast,  7  Wall.  624,  641;  The  Lottawanna,  21 
Wall.  558,  587;  Lord  vs.  Steamship  Co.,  102 
U.  S.  541. 

Under  this  power  the  states  may  also  pre¬ 
scribe  the  form  of  all  commercial  contracts,  as 
well  as  the  terms  and  conditions  upon  which 
the  internal  trade  of  the  State  may  be  carried 
on.  The  Trade  Mark  Cases,  100  U.  S.  82.” 

The  Interstate  Commerce  Act  (approved  February 
4th,  1887),  by  the  proviso  in  section  one,  expressly  ex¬ 
cepts  the  internal  or  domestic  trade  and  commerce  of 
each  state  from  its  provisions. 

In  the  recent  case  of  Hammond  Packing  Co.  vs.  Ar¬ 
kansas,  212  U.  S.  322,  decided  in  February,  1909,  the 
Supreme  Court  of  the  United  States  had  under  con¬ 
sideration  the  anti-trust  laws  of  Arkansas  and  their  ap¬ 
plication  to  foreign  corporations  engaged  in  both  inter¬ 
state  and  intrastate  business. 

In  holding  that  the  charter  right  of  a  corporation 
to  do  business  in  the  State  does  not  operate  to  deprive 
the  State  of  its  police  power,  and  that  the  franchise  to 
do  business  is  qualified  by  the  duty  to  do  so  conformably 
to  lawful  and  proper  police  regulations  thereafter  en¬ 
acted,  the  Court  said: 

“As  the  state  possessed  the  plenary  power 
to  exclude  a  foreign  corporation  from  doing 
business  within  its  borders,  it  follows  that  if 
the  state  exerted  such  unquestioned  power  from 
a  consideration  of  acts  done  in  another  juris¬ 
diction,  the  motive  for  the  exertion  of  the  law¬ 
ful  power  did  not  operate  to  destroy  the  right 


177 


to  call  the  power  into  play.  This  being  true, 
it  follows  that,  as  the  power  of  the  state  to 
prevent  a  foreign  corporation  from  continuing 
to  do  business  is  but  the  correlative  of  its  au¬ 
thority  to  prevent  such  corporation  from  com¬ 
ing  into  the  State,  unless  by  the  act  of  admission 
some  contract  right  in  favor  of  the  corporation 
arose,  which  we  shall  hereafter  consider,  it  fol¬ 
lows  that  the  prohibition  against  continuing  to 
do  business  in  the  state  because  of  acts  done 
beyond  the  state  was  none  the  less  a  valid  ex¬ 
ertion  of  power  as  to  a  subject  within  the  juris¬ 
diction  of  the  state. 

In  both  the  refusal  to  permit  the  coming 
into  the  state  and  the  exclusion  therefrom  of  a 
corporation  previously  admitted  under  the  cir¬ 
cumstances  stated,  while  it  may  be  said  that 
the  acts  done  out  of  the  state,  and  their  antici¬ 
pated  reflex  result  may  have  been  the  originat¬ 
ing  cause  for  the  exertion  of  the  lawful  au¬ 
thority  to  refuse  permission  to  come  into  the 
state,  or  to  revoke  such  permission  previously 
given,  that  fact  is  immaterial  in  a  judicial  in¬ 
quiry  as  to  the  right  either  to  refuse  to  give  or 
to  revoke  a  permit  to  do  business  within  the 
state,  since  the  power,  and  not  the  motive,  is 
the  test  to  be  resorted  to  for  the  purpose  of 
determining  the  constitutionality  of  the  legisla¬ 
tive  action.,, 

“The  chartered  right  to  do  a  particular 
business  did  not  operate  to  deprive  the  state 
of  its  lawful  police  authority,  and,  therefore, 
the  franchise  to  do  the  business  was  inherently 
qualified  by  the  duty  to  execute  the  charter 


15471—12 


178 


powers  conformably  to  such  police  regulations 
as  might  thereafter  be  adopted  In  the  interest 
of  the  public  welfare.  Besides,  it  is  not  dis¬ 
puted  that  the  state  under  its  Constitution  had 
a  reserve  power  to  repeal,  alter  and  amend 
charters  by  it  granted,  and,  therefore,  even  if 
the  impossible  assumption  was  indulged  that 
the  grant  of  the  power  to  do  business  implied 
in  the  absence  of  such  reservation  the  right  to 
carry  on  the  business  in  violation  of  a  lawfully 
regulating  statute,  the  existence  of  the  reserve 
power  leaves  no  semblance  of  ground  for  the 
proposition  The  claim  of  an  irrepealable  con¬ 
tract  cannot  be  predicated  upon  a  contract 
which  is  repealable.  Citizens’  Savings  Bank  vs. 
Owensboro,  173  U.  S.  636,  644.” 

X. 

We  respectfully  insist  that  by  entering  into  a  com¬ 
bination,  as  alleged  in  both  counts  of  the  information, 
respondents  have  sinned  against  the  law  of  their  crea¬ 
tion,  transgressed  the  loftiest  principles  of  public  policy, 
and  violated  the  common,  statutory  and  constitutional 
law  of  the  State. 

The  information  being  sufficient,  and  the  jurisdic¬ 
tion  of  this  court  complete,  we  respectfully  ask  that  the 
demurrers  be  overruled. 

ELLIOTT  W.  MAJOR, 
Attorney-General. 

CHARLES  G.  REVELLE, 
Assistant  Attorney-General. 

JAMES  T.  BLAIR, 

Assistant  Attorney-General. 


INDEX. 


Page 

Argument .  21 

Brief . 15 

Demurrers . 8-13 

Information .  3 

Sufficiency  of .  131 

State  jurisdiction .  165 

Common  law  in  force .  121 

Points  and  authorities .  15 

Quo  warranto  proper  proceeding .  148 

Statement .  1 

Summary  of  issues .  13 

Violation  of  Constitution .  21 

Violation  of  common  law .  42 

Violation  of  statute .  127 

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